Sorry, Gabe Newell: Microsoft is the Steam Box's biggest threat

In a recent address to at the University of Texas' LBJ School of Public Affairs, Valve's founder Gabe Newell talked in general terms about the company's future hardware plans. In summary, Valve is working on its own and with third party PC makers on what's been called the "Steam Box", a gaming-themed PC that's designed to work in the living room.

PC maker Xi3 is working with Valve on the "Piston" PC that will run Steam's Big Picture mode

Personally, we are pretty excited about the prospect of a PC that has been created with the help of some of the best PC game designers in the world. Combined with the experience that Valve has gained with their Steam PC game download service, the Steam Box could end up being our next gaming PC.

However, Newell has a rather ... interesting viewpoint when it comes to possible competitors to the Steam Box. You might think that he would believe that the console companies (Sony, Nintendo and Microsoft) would be trying to keep the living room to themselves. Instead, Newell thinks that it will be Apple that's going to be the biggest threat to its plans for the Steam Box.

Newelll was quoted during the address as saying:

I think that there's a scenario where we see sort of a dumbed down living room platform emerging — I think Apple rolls the console guys really easily. The question is can we make enough progress in the PC space to establish ourselves there, and also figure out better ways of addressing mobile before Apple takes over the living room.

Yes, Newell believes that Apple wants to replace all those Xbox 360s, PS3s and Wiis in the tens of millions of living rooms around the world. There's just one problem with that idea; Apple has shown no indication that they have any interest in such products.

Yes, Apple has its Apple TV set top box but it has pretty much treated it as its ugly stepchild compared to its iPhone, iPad and iPod family of products. Even its Mac PCs get more attention than the Apple TV, despite the fact that's it's actually a pretty cool add-on box that even allows users to stream content from their iPhone and iPad to their TV. That includes games, by the way.

The fact that Apple doesn't even bother to give the Apple TV a proper marketing and promotion budget, despite its cool feature list, shows that Apple doesn't care about the living room, or at least the living room that's centered around the big screen TV.

And what about all those rumors about a full fledged Apple television that have been going around the Internet for years? At this point, we will believe it when we see it. Apple's main focus seems to be on its iPhone and iPad lines, and there's no credible evidence that an iOS or Mac OS-based TV is even close to launching.

On the other hand, there's plenty of evidence that Microsoft will launch a successor to the Xbox 360 later this year. Microsoft started shipping the Xbox 360 to stores way back in 2005 (yes, that was well over seven years ago) and sold it as a game console, period. Over the past several years, Microsoft has added more and more entertainment and media features to the Xbox 360, turning it into a true entertainment set top box. In 2012, it even added a version of Internet Explorer which opened the console out of its closed sandbox and into the full Internet.

While Sony and Nintendo have offered up their own web browsers for the PS3, Wii and Wii U, the truth is Microsoft has done the most to introduce living room televisions to features that were unknown to most people just a few years ago.

While Microsoft may not want to talk about the next Xbox, the company is already preparing for it by launching a new Xbox Entertainment Studios division in the entertainment center of Los Angeles. In a press release issued on Monday, Microsoft said the studio will "create true interactive content for Xbox and other devices that will change the way entertainment content is experienced and delivered."

Hmm .. interactive content, eh? True interactive has been the dream of many a sci-fi novel, TV show and movie and the fact that Microsoft is working on these kinds of concepts gives us a big hint as to what the next Xbox will have in terms of content. If that kind of programming turns out to be popular, Microsoft may not be able to make enough of the next Xbox to meet demand.

We are aware that's a big "if". There are lots of questions about how interactive programming on the next Xbox will work and it could turn out to be as big of a dud as 3D TVs turned out to be. However, that doesn't change the fact that Microsoft is currently in the best position to pull it off, with Sony and Nintendo running behind and trying to catch up.

And Apple? Gabe Newell may be scared of what Tim Cook and the team at Cupertino are working on, but we think that he is chasing ghosts at this point. Could Apple make a push into the living room with a better Apple TV set top box or even a full TV? Sure. Are those efforts coming in the next 12 or 18 months? We highly doubt it.

There is no doubt on Microsoft's plans for the living room. They already have a foothold with the success of the Xbox 360 and the next version of the console will expand on those efforts. Microsoft may succeed or fail with those future plans, but they are in the works, and the fact that Newell seems to discount them is a mistake on his part.

We want to be clear; we really want to see what Valve has planned for its Steam Box hardware initiative. We think it could be cool. But Valve and Newell also need to be realistic on what their competition will be like for their plans. At the moment, the battle for the living room TV is Microsoft's to lose.

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