To be a loss leader doesn’t the need to lead to something?
The only way it could make sense that they’re selling these at a loss would be - oh yeah. They’re coming straight for Nintendo / Sony / Microsoft now, huh?
The day I see a steam console in wal mart is a day I will be very happy.
For Valve it would ideally lead to a new Steam account being created. Which would make sense if someone got one as a gift or something, naturally they would set up a Steam Account if they didnt already have one.
Also the new offerings are very much something Johnny Joe who has only ever owned a PlayStation, Nintendo, or Sony console would potentially buy.
Of course Johnny Joe would put the entire thing up his ass and die from heavy metal poisoning because he’s an idiot, but his peers would actually use them.
I guess that would depend on the front end and game support. If it is any less user friendly than Xbox or Playstation, people wont want to use it Johnny Joe and Little Timmy don’t want to fiddle with a bunch of settings and constantly change stuff to get games working. The Steam Deck does okay but I still find sometimes it needs some… coercing… to get some games to work right.
If they dial it in right, everything should work properly out of the box without needing settings changes.
A loss leader (also leader) is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services.
So the answer to their question is “Yes, a loss leader needs to lead to something”. I have no idea why you think they have no idea what they’re talking about.
Yes, but that’s a different sale. My point is it can still be considered a loss leader if they sell it at cost. It took them many millions to develop it, so overall they would be losing money on the hardware sales.
That’s as opposed to something like Costco’s hot dogs. There was no R&D there, so if they sold it at cost, I wouldn’t consider it a loss leader.
An item that is sold to you at a loss in hopes that you buy more profitable stuff from them to make up for said loss. Game consoles are usually sold at a loss in order to get people into their ecosystems, so they can buy things like games and subscription services, which are more profitable.
When the game launched I did all the trading. Idk how I managed too because it’s trading is so confusing sometimes. I love that AC4 streamlined a lot of it
I’m aware of Valve being very generous with warranty/replacements of controller hardware for the Index. Even years after the warranty is up. But I think this is because of the major durability issues and known defects that the Index Controllers have.
In any case, Valve seemingly has lost money on a certain percentage of Valve Index kits/controller hardware. Based on how many people I know, including myself, who have gotten replacement hardware from Valve. Sometimes many times for recurring issues.
But I’m not aware of Valve doing the same for the Deck.
Edit: and you can tell they focused really hard on making the new controllers more durable:
No charging port to melt
durable sticks that won’t start drifting
No special finish on the controller that can be worn/scratched away
No internal battery to go bad
seemingly far fewer delicate parts
Funny point on the melting charging port. 2 years or so after the Index came out, SteamVR started warning using with a status dialog that told users to stop charging their controllers while they use them. They never accounted for long play sessions and people who would want to charge while playing.
The steam frame controllers use AA batteries, the steam controller has a lithium ion internal battery.
Also it does have a USB port but the primary charging method is via the pogo pins. But obviously you might want to recharge from a wall outlet so they also include a USB port. But that’s obviously going to get used far less often than it would otherwise.
I actually think that, while it’s maybe a fun topic for idle conversation…it doesn’t have a huge impact in the way traditional console pricing normally does.
With a traditional console, what the console vendor chooses to do on hardware is what you get. Maybe, as with Microsoft on the Xbox Series X/Series S, you get a high and low end model, but that’s as much choice as you get. All the games are made for that hardware, and whether the platform lives and dies depends on it.
But…that’s not really true of the Steam Machine. It’s just another PC, albeit preconfigured for Steam and HTPC-oriented. If you want to get a lower-end PC or a higher-end PC, you have the option of getting one and plugging it into a TV and running the same games on it and save some money or with a bit more visual bling. The games for PCs are already more or less written to scale up and down with hardware.
And it’s not like Valve’s platform is gonna live or die based on the Steam Machine the way a traditional console generation is, where success of a hardware console is high-stakes for the manufacturer and the players in successfully getting a game library going. I’d guess that it might help Valve make strategic inroads into gaming in the living room. But even if it completely bombs, Valve is gonna keep right on selling games to people to run on PCs (and the Deck) and their huge game library isn’t going anywhere.
I think comparing it to a console is the wrong mindset. It’s a computer first that can also be a console. It’s also a pre built Linux based computer you can have a higher degree of confidence that things just work even after updates. It’s a legitimate competitor for a new windows PC as much as it is a console competitor.
Console manufacturers sell at a loss because they need to sell the console first before they can sell anything else. They can expect to make that money back on software the user could not have bought without the console.
Valve doesn't need people to buy Steam Machines to get them to start using Steam. In fact, I suspect most units sold will be to users who are already invested in the ecosystem. Selling at a loss would just be a straight loss to them.
They may be trying to muscle in on traditional console territory.
Steam has a well tenured reputation for having inexpensive games. They may be leveraging this to appeal to the console players turned off by the all recent price hikes.
I suspect the gabecube may be close to if not, at cost. I don’t think it’ll be at a loss.
Gabe has previously claimed that they developed the index because they didn’t want VR to die and even gave grants the game developers who made VR titles.
So it’s established that Steam is big enough and secure enough to risk cultivating new or disrupting old markets.
Operationally steam has low overhead and insane profit margin. Unless they fuck up the steam store they’re guaranteed massive profit.
If the new hardware flops and they lose a bit of money; Gabe just buys one less yacht and steam ticks on as normal.
As you say valve are incentivised to do this because it will move more people over to Linux. I suspect that they want that more than they’re really bothered about hardware sales so while I don’t think it’ll be sold at a loss, because frankly that would be stupid even if they could afford to do it, but I don’t think it’ll be anywhere near as expensive as some people seem to be claiming.
Console manufacturers haven’t sold at a loss in a long time.
I agree, it won’t be huge gains directly for them, but even moving people off of Windows benefits them by removing control a competitor (Microsoft) has. I somewhat agree that it won’t be sold at (much of) a loss, but maybe at cost. I’m sure they expect manufacturing prices to go down over time, and engineering was a one-time investment, so sold just below cost doesn’t seem unreasonable to me at launch, which then becomes at cost or above in the future.
This all depends on if their goals for it are short-term or long. Historically, they seem to target long-term. That’s why I think it’ll be as low as they can make it, which they also said they’re doing by only having 8GB VRAM as cost savings. They want to drop the price as low as they can to compete. They won’t compete at $1k. I doubt they’d compete at $600-700. I suspect they’re targeting $400-500, which seems like a reasonable cost for the hardware too.
Steam’s business model does prevent it from pricing its consoles like Sony, Xbox, Nintendo, etc. since they need the console itself to be profitable, not just a means of bringing in games sales.
It’s plausible that they’re taking into account an uptick in overall game sales from this console - at least for me, I’ve been purchasing new games mostly off of steam rather than playstation/nintendo ever since I got a steamdeck - but you’re right that they aren’t going to sell at a loss.
Regardless of the price (and whether or not I even buy one), I think it’s healthy to have another “big” player in the console market.
They can’t sell them at a loss without a locked-down ecosystem. Sony learned that the hard way with the OtherOS support for the PS3 that lead to a ton of them being purchased to build cheap supercomputer ls and never spending a dime on games or software to cover the loss.
I think that was overstated. Sure there were some “fun” projects for fun or publicity.
However supercomputer clusters require higher performance interconnect than PS3 could do. At that time it would have been DDR infiniband (about 20 Gbps) or 10 g myrinet.
Sure gigabit was prevalent, but generally at places that would also have little tolerance for something as “weird” as the cell processor.
OtherOS was squashed out of fear of the larger jailbreak surface.
I think that one was also significantly a publicity thing, they made videos and announced it as a neat story about the air force doing something “neat” and connecting relatable gaming platform to supercomputing. I’m sure some work was actually done, but I think they wouldn’t have bothered if the same sort of device was not so “cool”
There were a handful of such efforts that pushed a few thousand units. Given PS3 volumes were over 80 million, I doubt Sony lost any sleep over those. I recall if anything Sony using those as marketing collateral to say how awesome their platform was. The losses from those efforts being well with the marketing collateral.
IIRC, the Deck, at launch, had a limit per Steam account, and it had certain requirements. There’s no reason they couldn’t do something like that here. Sure, it makes it harder to convert console players if they do the same technique, but it could be restricted sales based on something.
Yeah they said they are pricing the Steam Machine at PC market prices, but they do having to contend with reality. There are consoles on the market that are more powerful at a lower price point, it will dampen their sales for sure. I mean most pcgamers probably have more powerful hardware already, what is the incentive? Sure small form factor, but is it worth a premium price to the average pcgamer? Console peasants will turn their noses up at it, so who are they marketing to?
I can see the Steam Frames selling better due to it being a fully untethered VRPC headset that can play more than just VR games. Not to mention you can stream from a more powerful PC to the frames making the battery last much longer and better gfx fidelity.
The Steam Controller has to contend with a flooded market of users used to using one type of controller, so a little bit of an uphill battle there too.
I would be happy to wait and see but idiots online keep trying to insist it’ll be $2,000 even though the hardware isn’t close to worth that much. Some of these people are big influencers and really should know better.
I want it to be a successful product, that I can buy, and will be supported for a useful number of years. $800-1200 feels OK for that. $2000 feels like Apple Vision territory.
Jesus, man: haven’t you ever been excited about a thing before it’s on shelves? Speculated about a sports game before it’s over? Talking about your anticipation is part of the fun.
There are people online who are wrong. I can’t just ignore that, they must be told why they are wrong.
Seriously though it’s a good idea to correct people when they make stupid baseless claims because other people won’t necessarily have the technical understanding to judge whether their claims are based on reality or not.
Many of the people who are doing this are YouTube or Instagram personalities with lots of children following them, I like this product and want it to succeed, and I don’t want children to lose interest in the idea because their favourite idiot instagrammer reckons it’ll cost an absurd amount of money.
I’m utterly confused about why you are upset that people are doing that. There’s absolutely no need for you to engage in it.
Valve will have a good enough overview on the situation and if they think it will hurt sales they can simply make a statement. They can handle it.
It’s interesting to discuss about the price but being upset about „idiots“ who have wrong ideas and playing hero for a multi billion dollar corporation is something I’m confused about.
Nah, it’ll probably be $800-1k. It’s basically a 7600 CPU + RX7600 GPU or whatever, and it’s not really upgradeable. So somewhere between the Series S and X in performance, and not subsidized by game sales.
Is that part of the quote? Because I just saw “priced like an entry level PC, not like a console”, which was more ambiguous than saying “priced like a console”. One man’s entry level PC is $300, and another’s is $1000. I have a mini PC with the power of a PS4 Pro, which I’d easily consider entry level, and it cost me $530 about a year and a half ago.
It's possible I'm just interpreting the quote wrong. I figured they were making the distinction between "console" and "entry level PC" as a way to say "The price isn't set yet, but don't expect this to be $400-500"
Yeah, leaving it ambiguous like this leads to wild speculation, and I think you misquoted that with your own assumptions. You might be right, but Digital Foundry seems to think $400-$500 is possible. Given the cost of my own mini PC, which is older and requires higher margins than Valve can get away with, I would even believe $400-$500. But we just don’t know. Everyone’s best guess for the price of this thing has a low floor and a high ceiling, which will make this all really funny once we know the actual price.
It’s not particularly great hardware. It’s fine, but not great. The most obvious thing is 8GB VRAM, which is bare minimum for modern gaming really. Add in that they’re buying in bulk, that price seems reasonable.
I know they don’t have the same supply chain at all but Apple sells an entry Mac Mini for $600. That makes me feel like a similarly priced Steam Machine is possible.
Apple mini is a hard comparison to make because the cheapest mini is a loss leader. Add a bit of extra ram or extra storage, which you have to do since the base model is very limited and the only way to get it is through Apple because everything is soldered together, then it is suddenly more than a $1k PC. They make the profits up with those upgrades which are practically mandatory and grossly overpriced.
The base M4 model is 16GB ram and 256 GB of storare and it costs $600, “cheapest minipc ever with such performance”.
The 512GB storage model costs $800.
May I point out that 256GB of ssd storage does not cost $200.
The 24 GB model costs exactly $1000.
No matter how much ram prices are ramping up right now, 8GB of sodimm ram does not cost $200…yet.
Anything else above those specs throws the Mac mini into $1k+ territory. It can go all the way up to $2600.
Now, Apple rarely publishes manufacturing numbers to the public. But historically this has always been their strategy. A base product that seems too good to be true (because it is) that leaves buyers wanting a bit more. For which they get skinned alive, price wise. Of course, I can’t be 100% certain that the base Mac mini is sold at a loss. But evidence suggests the $600 mark is priced exactly to act as a loss leader.
You didn’t present one piece of evidence that $600 is a losing price point for the base model (and you even stated that explicitly). All you’ve done is shown that Apple is known for their outrageous markups; something we all can see with our own eyes.
Given they’re greedy enough to markup storage and ram so much; I’m willing to bet they won’t bother with techniques like “loss leaders”. I bet the margins are just extremely tight but that profit is above zero.
That’s just pointing out upgrades carry a large price, not that the base model is at a loss.
Which is a super common strategy in pre built, especially in systems that can’t in theory take third party upgrades. Commonly a mobile platform will charge a hundred dollar premium for like 20 dollars worth of UFS storage. At least at some points PC vendors have done DIMM SPD lockouts to force customers to first party so they can charge a significant multiple of market rate for their parts.
I doubt anything in Apple’s lineup is sold at a loss. They might tolerate slimmer margins on entry, but I just don’t think they go negative.
I’m right now in the process of building an “entry level PC” from components, here defining it as new currently produced off the rack parts, no used, no refurbished, and with a Ryzen 7500F and a Radeon RX7600 “AMD can’t decide whether their cards get an XT or not, so why should I?” I price it out right at $900. To go much below that, I’m gonna have to resort to some jank.
Dumpster dive a core i5 10400F Optiplex, stick a GTX-980 in it, install Linux Mint and you’re making 120FPS in CS:GO for the price of a foot pic.
Your entry level PC is what I would have called high end as little as four years ago. I built a machine in 2021 with a Ryzen 5 5600x and an RX 6800 XT; it still runs the latest UE5 games at high settings. I would call that above and beyond entry level.
It’s a little hard to comment on high end 4 years ago with low end now because technology marches on, but no I don’t think it would.
I also built a PC with similar specs for my cousin (we’ll call her Lila) to that in October of 2022, Ryzen 5600X/Radeon RX6800 (non-XT). Built that rig for my cousin. Socket AM4 B550 chipset, 16GB DDR4-3200 RAM. I had a budget of $1500, $500 alone went to the GPU. The 6800 was two years old at that point. Solid mid-range PC that can handle 1440p gaming with no questions asked…okay one question asked: “are you sure you want ray tracing enabled on an RDNA 2 platform?”
You could go higher. 32 or even 64GB of RAM, a 5800X3D CPU, a Radeon 6950XT or RTX-3090 would provide much more solid 4k gaming with significantly better ray tracing…for a couple more grand.
The machine I built last year, a Ryzen 7700X/Radeon 7900GRE for myself. I spent $2000, I got socket AM5, 32GB DDR5-6000, a 16 thread CPU, and the third-to-highest GPU in the range. This thing does 1440p ultrawide or reaches into 4k with aplomb and ray tracing is worth turning on. You can still go up from here; the 7900XT and XTX are even more powerful and again Nvidia offers even higher, and there’s several CPU SKUs above me. Mine is a mid-to-high end PC, I expect it to be relevant for 5 more years, then I’ll buy a Ryzen 11800X3D on clearance for it.
Meanwhile, the PC I’m building now is for a 12 year old (Lila’s daughter, let’s call her Maggy). 16GB of DDR5-5600, a spec’d down 6-core without integrated graphics, the pack-in Wraith Stealth cooler, and a x600 tier GPU for a solid 1080p experience, more than enough for the hand-me-down 1080p60 monitor she’s gonna get with it. This computer is the same generation as mine, but less than half the price at $900 and change. And I honestly struggle to build much lower than that without resorting to used parts, new old stock, or jank.
High end would be the high end of the market components, right? So RTX 5090 ($2k+) or RX 9070 ($700+). High end CPU would be Ryzen 7 9800X3D for $400. Add a motherboard and copious RAM and you’re looking at $2k+ for all AMD, $3-5k for Nvidia.
Mid tier would be somewhere in the middle, so cut those numbers in half ($1-1.5k). Low end is what you can get away with, so cut the mod tier in half again, though going below $700 would be hard for anything but the most casual of games.
Personally I don’t think I would say that most people would consider a $1,000 PC to be entry level. To me entry level means something that a kid could save up their pocket money for in a reasonable amount of time maybe with a paper route to supplement. I’d say entry level ends at about $700 just to throw a number out there. For $1,000 you could get a PS5 and a PSVR2
But it’s also a handheld console so that doesn’t really track.
An entry level gaming PC doesn’t have to have a battery and it doesn’t have to have a screen which are big expenses. You can’t just take the price of the steam deck and multiply it because so much time has passed between the releases of the two products and they’re not equivalent anyway. It’s an apples to oranges comparison.
On the one hand, i get it. It will be for enthusiasts only if that’s the case. On the other hand, I feel like for the amount of profit this company brings in, I am a little shocked that they don’t even try to cut the price back a bit to sell more. I guess whats the point when you don’t even have to do this at all and it sounds like the entire project is just a fun way to spend some time seeing what you can come up with and sharing that with the people that can afford to buy cool things.
On the one hand, i get it. It will be for enthusiasts only if that’s the case.
Note that I haven’t said anything about what the price will be, just that Valve has stated that it won’t be a loss leader.
I’ve seen rumors that the Bill Of Materials plus Valve’s usual overhead would still result in a system valued at $500, though I haven’t seen the source and am very skeptical of it.
On the other side, XBox is allegedly targeting $1200 on their standardized custom gaming PC, which I doubt would be worth the price, especially with it running Windows.
Oh, I agree. My price is just speculation. Also, Xbox is done. They had a handful of exclusives this year that, as far as I saw, were nothing to sell systems over, and from the looks of it, only Fable is set for next year. As soon as I saw them jump ship with a console and finally share their best games like gears of war, I knew it would only be a matter of time.
That handheld is also windows only and to late to the party, and your right they just went full pc only at a price nobody will pay when you can probably get your own pc that will have little difference. They will be with Sega soon enough and probably use the companies they purchased to continue creating games for everyone else and maybe just focus on the windows store for semi exclusivity after the pc thing fizzles out.
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