Low-key this is the only reason I'm quite interested in the prospects of their plans here.
So imagine the meltdowns if SEGA became an OEM licensee of Steam OS instead
Will the Xbox run Steam OS? I'm assuming there's a requirement to use Windows here in which case uh gaming PC's already exist just fine without some stupid Xbox branding
Very likely not. If MS want to ensure preservation of Windows as the OS for PC gaming, why would they let users undermine that by installing an OS whose main goal is to move people
away from Windows for PC gaming?
Fact is, Steam OS is quite some miles ahead of Windows in terms of streamlining and resource-efficient modern PC gaming, by most takes, and more friendly for a console-like QOL & UI experience. The only thing gaming-wise MS have currently at a comparable level is Xbox OS, but that's a very much locked-down, hyper-custom version of Windows. They'll have to add compatibility for Windows applications via extended integration of various Windows kernel-level features, libraries, APIs etc into Xbox OS through some kind of protection layer, and filter whitelisted Windows apps through the Xbox Store.
Although, seeing how Xbox OS and Windows Store prioritize AppX as
GHG
was saying, I guess MS will need a second type of method to extend Windows functions for non-AppX software to run through Xbox OS. It's the only way they'll be able to have storefronts like Steam function on their device, and then they'd probably still need to find ways to tie in certain Xbox OS UI functions to those storefronts (maybe that's part of the reason for the news of them revamping aspects of their desktop Xbox app?). All of this on their own, BTW; I strongly doubt Valve or Epic (well, Epic may be more willing for market share reasons) will go out of their way to work with MS on this, as they gain little in the exchange compared to what Microsoft would gain.
In fact I kind of wonder if Valve pushing new Steam devices might create complications in Steam being an alternative storefront on Xbox devices; it's highly unlikely Microsoft will license Steam OS (for reasons I mentioned earlier), but Valve probably doesn't want hardware manufacturers selling themselves on being Steam-compatible if they aren't licensed by them and don't comply with what we already know Valve are looking for OEM partners to do. I'm guessing MS and Valve would just settle on an agreement where as long as MS gets Steam compatibility going on their own, and they don't gimp storefront performance (accidentally or purposefully), they'll let MS enable access to Steam in whatever way fits the business model MS want to do.
You just likely won't hear MS say their stuff is "Steam-compatible" if that's a tagline reserved for OEM licensees of Steam OS. Rather, they'd say something like "You can access the Steam storefront", which is both a part of but still distinctly different from Steam OS.
EDIT: If anyone's wondering how/why Valve would "block" Microsoft from enabling Steam access on their devices...well, it's because these Xbox devices are going to be PC-like, but they aren't actually PCs, if that makes sense. These are devices that, to Valve, will likely be seen as direct competitors to their next wave of Steam systems, rather than generic SFF Windows PCs.
The fact MS are very likely using Xbox OS here (even if a modified version) would just give further support of that position to Valve. Again, I don't expect them to actually force MS to block Steam access; they'll let them provide Steam access on the Xbox devices as long as Steam game and launcher performance isn't gimped compared to similarly-spec'd PCs just to give an artificial edge to games on the Xbox Store.
Just looking at a possible reason why Steam would entertain the idea of enforcing that type of block, is all. It could kind of work both ways though: MS could, say, force Valve to not allow Windows as a dual-boot option on Steam devices.
But realistically, I wouldn't expect them to push with that because it just cuts away at potential customers to keep within the Windows ecosystem, and since these are PC gaming customers, MS has
more a need (needs to work harder) to convince them to stay in Windows, than Steam needs to convince them to
leave Windows for Steam OS.
maybe they partner with Steam to make a gaming focused Windows? who knows
they already got Home Edition and Professional, why not a Gaming Edition?
Steam won't partner with them and I hope they don't, either. That's exactly the kind of thing that'd let Microsoft take a cheap and lazy route; all the people who keep saying they want real competition, should be wanting MS and Valve to do their own thing and see who can do this particular platform ecosystem push better.
But that requires them being in actual competition. Which of course can be friendly (it usually is), but I wouldn't want to see that type of partnership which IMO would ultimately be detrimental for both parties.
If third parties can make bank then why would MS give it up (Xbox console). I have doubts on why anyone would rationally make consoles for a brand where consoles sales have flatlined.
Good point, and I think that's why MS still will need to have skin in the game, i.e still produce these devices themselves. Why expect 3P to do what you yourself aren't willing to do, especially with a brand that has deteriorated in value over the years?
Ideally, MS will be producing most of the stock themselves and we'll see a small handful of 3P OEMs supplement where it makes sense. Like I was semi-joking about a while ago if SEGA might want to be one of those OEMs for a market like Japan or parts of Asia, that would actually be a very smart thing to do. But the business model has to allow it.
And that business model has to reflect something closer to what the PC market is doing. For MS that'd have to pertain to both hardware and software, which is why I don't think they're fussed about bringing all of their games to PlayStation and Nintendo because, if they aren't trying to operate with the traditional business model anymore, their devices have to justify themselves on features, QOL etc., not content exclusivity.
If over time more OEMs want to make their variants or increase their volume of variants, then that's just a bonus. But none of that's going to happen if MS try cheaping out and refuse to manufacture or sell "standard" versions of these devices themselves. The good news for them, I guess, is that they probably have a good idea of what volumes they can realistically put on the market to sell, which will determine the pricing and profit margins they have, which will also have implications on what standardize specification standard they run with and the range of modularity/flexibility in altering aspects of that spec.
MS would likely much rather prefer 2-2.5 million Xbox PC-like devices a year (across handheld & home system) with healthy profit margins on a non-subsidized & soft-subsidized pricings, than sell 3 million Xbox consoles that they're losing $100 - $200 per unit and can't monetize as much due to drop in B2P sales for the store, stagnant subscriptions, and losing more players than they're able to bring in to grow an install base required for a more traditional console platform.
And with those numbers, they'd naturally attract more 3P OEMs to want to produce variations, because look at how many already want to make PC handhelds when that market (so far) is dictated by a Steam Deck moving ~ 1.5 million a year if that (though in their case, I think it's more a supply constraint; Valve could be doing more if they had higher capacity which is probably what the new Steam devices OEM push is about, on one level).
Y'all out here pretending Google doesn't do this sort of similar merged strategy with Android, Pixel handsets, Samsung, devices, OS, apps etc etc etc.
The rhetoric that Xbox cannot expand in ways different to Sony or Nintendo is stupid.
One can reasonably argue the cross platform nature and recent years of manoeuvring from Xbox with their ecosystem, acquisitions and openess has poised them for this option.
The reason a lot of us have doubts to MS pulling this off, is because they've completely failed at the traditional console business model, more or less since 2011, getter worst at it every year and then nosediving epically after 2020.
Their track record in managing a game platform successfully is not good, so until they can prove that their pivot will work, there will be many well-deserved doubts.