Great news, it seems like Xbox are still hungry. Love to see it. Competition is healthy for the industry.
I do wonder about the "Won't be tied to a single store" line, she can't possibly be meaning for the upcoming console right? Must be targeted at the Xbox branded handhelds and PC? Seeing rumors going both ways.
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But if Xbox can somehow bring Steam into the living room in a console package it would be a huge boon. If so I wonder what Gabe's strategy would look like. Would Valve be content with MS bringing Steam to the console masses for them and step off the gas, or would they be willing to aggressively support the development of SteamOS.
In the end the best product with the most features and bang for your buck wins. And if it turns out the OS isn't locked down I can easily see myself becoming a Green Rat, even if it'll make me feel dirty.

If it's a walled garden/paid MP, then it's dead to me.