I cannot get over Valve’s aggressive pricing for the Steam Deck

Valve has a new handheld, and I’m shocked by its price more than anything else. The Steam Deck is launching this December starting at $400. And that price gets you the 64GB model and a Nintendo Switch-like handheld running modern AMD hardware. This includes the following list of specs for the Steam Deck, which runs the Arch Linux-based SteamOS 3.0:

The key specs for the Steam Deck are the four-core 3.5GHz Zen 2 processor, which should be quite efficient, and the incredible eight RDNA2 compute units. For comparison, the Xbox Series S has 20 RDNA2 CUs at only 1.565GHz. Based on these specs alone, it’s likely that the Steam Deck runs as well as a launch Xbox One or PlayStation 4.

But then, how is this machine only $400. Even if you go a step up to the faster NVME SSD storage at $529 (256GB) and $649 (512GB), the Steam Deck is still incredibly affordable compared to similar devices.

The Aya Neo is a similar device that costs about $900, and yet it only has Vega 6 graphics. That is fine, but Vega 6 is multiple generations behind RDNA 2. And the $1,140 GPD Win 3 uses Intel Irix Xe graphics, which are impressive compared to older integrated Core GPUs, but it isn’t in the same league as RDNA 2.

Valve went with a ‘painful’ price

So, what happened here? Did Valve just discover some secret to lower its price? While I’m sure the engineers at the company did find some key ways to save cash, the reality is that they are almost certainly losing money on this hardware. Valve chief executive officer Gabe Newell confirmed as much in an interview with IGN.

“I want to pick [the Steam Deck] up and say, ‘Oh, it all works. It’s all fast.’ And then price point was secondary and painful,” Newell said. “But [price] was pretty clearly a critical aspect to it. But the first thing was the performance and the experience, [that] was the biggest and most fundamental constraint that was driving this.”

So Newell is confirming that the company didn’t want to make any compromises to performance, and based on the specs, I would expect the reality to reflect that. This means Valve had to make comprises elsewhere, and that is likely the cost. Only it seems like it won’t pass that cost on to consumers, which is where the pain is coming in.

To me, this signifies that Valve is serious about this nascent PC gaming handheld market. It believes that it can take on this segment both in terms of its hardware and its software. And it is coming out of the gate with pricing so aggressive that it blows away its direct competition — and even makes the aging Nintendo Switch look worse by comparison.

But even if another company comes in to undercut Valve, it is still positioning its software as central to the handheld market. And that is key to what Valve is doing with the Steam Deck.