Valve's new hardware will NOT be loss leaders

Submitted ⁨⁨6⁩ ⁨hours⁩ ago⁩ by ⁨mnemonicmonkeys@sh.itjust.works⁩ to ⁨games@lemmy.world⁩

Can everyone please stop claiming and speculating that Valve’s new hardware will be loss leaders? If you watch LTT and Gers Nexus’s first videos on the announcement, they actually apoke with Valve’s engineers. And the Valve representatives already said that the new hardware WILL NOT BE LOSS LEADERS.

There isn’t even evidence that the Steam Deck was a loss leader. All GabeN said was that the lowest cost launch model was priced “painfully”, which doesn’t necessarily mean it was sold at a loss, it could easily have been sold at a very tight margin.

And no, low margins does not meet the definition of a loss leader. A loss leader is a product sold below cost, in that every unit sold actually costs the seller money.

I get the desire to speculate on new hardware. It’s fun and it helps pass the time until we hear more info from Valve. But there’s limits to what is reasonable. Valve has already stated that the new hardware won’t be loss leaders, so hoping and/or claiming they are isn’t reasonable.

Sorry for the rant, but all of the comments that seem to have only skimmed headlines are quickly getting to me

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Comments

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krooklochurm@lemmy.ca ⁨1⁩ ⁨hour⁩ ago
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.

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- RightHandOfIkaros@lemmy.world ⁨1⁩ ⁨hour⁩ ago
  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.
  
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  - krooklochurm@lemmy.ca ⁨1⁩ ⁨hour⁩ ago
    Yeah.
    
    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.
    
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DarrinBrunner@lemmy.world ⁨5⁩ ⁨hours⁩ ago
We could, you know, just wait and see.

*ducks*

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- NOT_RICK@lemmy.world ⁨2⁩ ⁨hours⁩ ago
  But will the new valve hardware help fill the empty pit in my chest?
  
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- ivanafterall@lemmy.world ⁨4⁩ ⁨hours⁩ ago
  WHY YOU LITTLE…
  
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- PumaStoleMyBluff@lemmy.world ⁨3⁩ ⁨hours⁩ ago
  If you don’t have a rigid and openly hostile opinion within 3 seconds of a new product announcement, you are an anti-capitalist commie!!
  
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- someguy3@lemmy.world ⁨4⁩ ⁨hours⁩ ago
  … Duck… Goose.
  
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- SeductiveTortoise@piefed.social ⁨3⁩ ⁨hours⁩ ago
  but… I want it now?
  
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hperrin@lemmy.ca ⁨1⁩ ⁨hour⁩ ago
Even if they sell at cost, they’re losing money because of the R&D costs.

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- Nilz@sopuli.xyz ⁨46⁩ ⁨minutes⁩ ago
  …But then in turn they’ll earn money with Steam sales, so they’ll be earning money.
  
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missingno@fedia.io ⁨3⁩ ⁨hours⁩ ago
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.

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paraphrand@lemmy.world ⁨2⁩ ⁨hours⁩ ago
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.

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chiliedogg@lemmy.world ⁨4⁩ ⁨hours⁩ ago
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.

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Hannibal@lemmy.world ⁨49⁩ ⁨minutes⁩ ago
I thought they originally started their first attempt with Alienware? They gave up. I’d have to see how their newer one is better.

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SpicyTaint@lemmy.world ⁨2⁩ ⁨hours⁩ ago
What the hell is a “loss leader”?

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- rafoix@lemmy.zip ⁨1⁩ ⁨hour⁩ ago
  When a business sells something at a lower price than it costs for the purpose of attracting more customers.
  
  Another example is Costco rotisserie chicken.
  
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- ryathal@sh.itjust.works ⁨1⁩ ⁨hour⁩ ago
  A product sold at a loss to attract customers who hopefully buy other products with higher margins that result in a net profit for the retailer.
  
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- wirelesswire@lemmy.zip ⁨1⁩ ⁨hour⁩ ago
  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.
  
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The_Picard_Maneuver@piefed.world ⁨5⁩ ⁨hours⁩ ago
Since they've said it's basically an entry level gaming PC that will cost more than a console, I think the >700, <$1000 speculation is most likely.

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- ampersandrew@lemmy.world ⁨4⁩ ⁨hours⁩ ago
  
  that will cost more than a console
  
  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.
  
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  - The_Picard_Maneuver@piefed.world ⁨4⁩ ⁨hours⁩ 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"
    
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- someguy3@lemmy.world ⁨4⁩ ⁨hours⁩ ago
  Not like a console says not a loss leader to me.
  
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taiyang@lemmy.world ⁨1⁩ ⁨hour⁩ ago
I agree we don’t know if they’re loss leaders yet. I will say that even if the hardware is priced at a loss, though, it’ll sell more Steam games. Ultimately I don’t know if it really matters.

Though yeah, people should get past headlines. Lol

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warmaster@lemmy.world ⁨5⁩ ⁨hours⁩ ago
Cost aside. If they don’t price it competitively between the Xbox and the PS5, the Steam Machine will be DOA.

The Deck is a perfect example of what they should try to replicate. If they don’t do that, it will flop.

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- RicoBerto@piefed.blahaj.zone ⁨5⁩ ⁨hours⁩ ago
  It’s a small computer, it isnt going after the Xbox or PS5 customers. It’s going for the people who want a computer in their living room.
  
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  - Arcane2077@sh.itjust.works ⁨4⁩ ⁨hours⁩ ago
    This comment is so silly and yet I keep seeing it everywhere. What do you think the Xbox and Playstations are? What is it that xbox and playstation customers are looking for that this small computer isn’t?
    
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  - Ulrich@feddit.org ⁨1⁩ ⁨hour⁩ ago
    Hard disagree. I think that’s exactly who they’re going after. That’s why they added all the console features like CEC, wake on BT, background updates, etc. etc. and why they gave it a controller-first interface.
    
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- JoshuaFalken@lemmy.world ⁨4⁩ ⁨hours⁩ ago
  I’m not sure cost can be set aside from a price discussion when they’ve explicitly stated it won’t be a Costco rotisserie chicken.
  
  With the number of consoles sold this generation, I’m not sure where the limit is for what people will spend to play the games they want. With console pricing has trailing budget gaming PC’s, I could see a number of people getting a Steam Machine in lieu of the next Playstation or Xbox.
  
  What would be interesting to see in the future is the split between units sold to lifelong console players making a change, and pre existing Steam users with stuffed libraries buying one for the couch. If the latter make up the majority of sales, but they priced it like a chicken, that’ll be a problem pretty quick.
  
  Hopefully it shakes out well and indie game developers reap some well deserved rewards.
  
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- pilferjinx@piefed.social ⁨4⁩ ⁨hours⁩ ago
  Is the machine competing with consoles? I thought it was just packaging an adorable sized pre built PC.
  
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  - ag10n@lemmy.world ⁨1⁩ ⁨hour⁩ ago
    I think this is the goal that it would be priced competitively with the Pro or higher end consoles
    
    They’ve built an ecosystem that gives you that console experience and if you really want to use it as a PC then you can.
    
    The whole thing screams high quality experience for those that want it to just work or those that want to tinker
    
    They really know their audience
    
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Tywele@lemmy.dbzer0.com ⁨5⁩ ⁨hours⁩ ago
I‘m always amazed at the amount of people believing the Steam Machine will be sold for the same or less than the most expensive version of the Steam Deck while being six times as powerful.

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- Deconceptualist@leminal.space ⁨4⁩ ⁨hours⁩ ago
  Just playing devil’s advocate here. I don’t necessarily disagree with you, but there are some interesting factors at play.
  
  The Steam Machine won’t need a screen or battery, two of the most expensive components on the Deck. So that can go into better CPU/GPU/RAM instead.
  
  Valve proved they can make a successful physical hardware product with the deck. That gives them a lot of negotiating power with AMD to get the best deal they can.
  
  Unlike with the Deck, they’re releasing the new gadgets in almost all major countries simultaneously. That means they’ve may have already started manufacturing months ago, and are benefiting from economy of scale at an entirely new level.
  
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  - themurphy@lemmy.ml ⁨4⁩ ⁨hours⁩ ago
    Steam Machine is also bigger. Small costs money if you want powerfull.
    
    Also, it’s newer hardware.
    
    I also think it will be priced at least a 100€ above the Deck, but I would also be willing to pay that for a console/living room computer.
    
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- TheMinions@lemmy.dbzer0.com ⁨5⁩ ⁨hours⁩ ago
  I’m fully expecting an 800+ USD price tag. And I’ve made my peace with that.
  
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  - snooggums@piefed.world ⁨5⁩ ⁨hours⁩ ago
    That's my average, but wouldn't be super surprised if it was up to $1000 due to tariff and AI shenanigans
    
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  - Anissem@lemmy.ml ⁨4⁩ ⁨hours⁩ ago
    Please Valve take my moneys
    
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UltraMagnus@startrek.website ⁨4⁩ ⁨hours⁩ ago
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.

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- mnemonicmonkeys@sh.itjust.works ⁨1⁩ ⁨hour⁩ ago
  
  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.
  
  Tbh, I think it’d be healthier if the console market finally died and Playstation and Nintendo migrate to PC. Closed off ecosystems are anti-consumer
  
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proper@lemmy.world ⁨5⁩ ⁨hours⁩ ago
“stop speculating! it doesn’t align with MY speculation” oh ok.

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- Deconceptualist@leminal.space ⁨4⁩ ⁨hours⁩ ago
  Uh, it’s not speculation if OP is referencing what Valve staff have said literally and unambiguously.
  
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- Beacon@fedia.io ⁨4⁩ ⁨hours⁩ ago
  Tell me you didn't read the post before commenting without telling me
  
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tal@lemmy.today ⁨3⁩ ⁨hours⁩ ago
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.

With a traditional console, what the console vendor chooses to do is what you get. Maybe, as with Microsoft on the Series X/Series S, you get a high and low end model. 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 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 them make strategic inroads into gaming in the living room. But even if it completely bombs, Valve is gonna keep right on going selling to people to run on PCs (and the Deck) and their game library isn’t going anywhere.

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- ryathal@sh.itjust.works ⁨1⁩ ⁨hour⁩ ago
  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.
  
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HeyJoe@lemmy.world ⁨5⁩ ⁨hours⁩ ago
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.

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FreeBooteR69@lemmy.ca ⁨4⁩ ⁨hours⁩ ago
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.

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- xxd@discuss.tchncs.de ⁨3⁩ ⁨hours⁩ ago
  
  I mean most pcgamers probably have more powerful hardware already
  
  According to Valve, it should outperform or match 70% of current PCs owned by gamers. So while not crazy powerful, it might be an affordable (hopefully) upgrade for some more low spec gamers.
  
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artyom@piefed.social ⁨3⁩ ⁨hours⁩ ago
People still say this about the Steam Deck 3 years later even though, as you said, there’s no evidence of that, so, good luck with your message LOL

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