Selling hardware is hard, Microsoft warns Valve

Picture unrelated, but it made me laugh anyway.

Valve, venerated software proprietors, Will soon be entering the hardware market with its Steam Box; initially by backing hardware makers like Xi3 with the Piston, and eventually with its own, Linux-powered hardware. It’s a brave and bold decision for a company that’s traditionally focused on software. Another company that focused on software but is now a major hardware player is Microsoft, who’s warned Valve that the hardware market is tricky business.

“Entering the hardware business is a really tough business,” Microsoft’s Phil Harrison (who used to be Sony’s Phil Harrison, before being Atari’s Phil Harrison) said to Eurogamer. “You have to have great fortitude to be in the hardware business and you have to have deep pockets and a very strong balance sheet. It’s not possible for every new hardware entrant to get to scale.

“They can be successful at small scale. But it’s very rare for a new hardware entrant to get to scale, and I mean tens or hundreds of millions of units. There are a very small number of companies that can make that happen.”

“And it’s not just having a great brand or a great software experience. It’s about having a supply chain and a distribution model and a manufacturing capacity and all the things that go with it. It’s a non-trivial problem to solve and it takes thousands of people to make reality.”

I’ve weighed in on the subject, and I think it could end up being a pretty big mistake for Valve.

What do you think? Should Valve stick to making great games and evolving their Steam platform…or is the Steam Box that natural evolution?

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