I don’t see how anyone is going to “own” the next generation of gaming. The upcoming cycle will be a system shock to the industry, and while it won’t mark the end of any established platform, I see it shifting the industry out of its console-centric mindset.

If the recent Consumer Electronics Show was any indication, Valve — in conjunction with a handful of PC makers — will try to disrupt the console market in 2014. Modular computer maker Xi3 will likely be the first out of the gate with the Piston later this year. Valve will follow with its own fabled “Steam Box,” named after the company’s popular Steam game distribution platform, in early 2014. Both units have the same goal: to make PC gaming easy and accessible on the television. Of the two, whatever “official” machine Valve produces will be more successful with pure gamers, but two things give me pause.

Steam’s Big Picture

First, Steam Box will be Linux-based out of the box, not exactly an operating system that supports a robust gaming library — even on the Steam service itself. Valve co-founder Gabe Newell has said that users are welcome to install Windows on the machine if they like. But given his cooling attitude toward Windows as an OS for gaming, I wonder if the company will be pushing Linux versions of future games from this point on in preparation for Steam Box. I also wonder whether it will adopt Linux for Steam’s huge backlog of games, which would be a major draw for any potential buyer. I’d hate to think that Valve would leave it up to the consumer to configure a dual boot for Windows and Linux because that will probably scare off buyers new to a PC gaming setup.

Second, I question how pricing will work out. Xi3′s “Piston” — essentially its version of a Steam Box — could start at a fairly steep price point of $999, which is quite a shock if it’s looking to woo console buyers who’ve never paid more than $600 for a new console. Valve may introduce a version of its own Steam Box at a reduced price, but I think the trade-off will be reduced “upgradability,” which is often a draw for PC gaming. At too low a price point, Steam Box is simply going to become another console with locked-in hardware. Since Microsoft and Sony seem to be planning announcements for their next-gen consoles before the Electronic Entertainment Expo, I think E3 will be Valve’s show this year if it chooses that venue to discuss the Steam Box. It’s important that it announce hardware prices and a concrete launch date then because I suspect it’s going to be an either/or decision for most gamers on whether they’ll choose either a PlayStation 4/Xbox 720 or a Steam Box. If they choose one of the former consoles in late 2013, that could make for a slow start for Steam Box if it launches in early 2014.

Nintendo has already delivered its answer to next-gen, going for innovation on the Wii U with its unique-screened GamePad controller. It’s HD gaming about six years after it became the industry standard, but Nintendo will find an audience with those faithful to its brands and may work its magic once again on the more casual audience it roped in with the Wii. If Nintendo’s eShop stays friendly to independent game developers, I could see it becoming a well-known platform in the vein of Steam for smaller titles. That, and Nintendo’s own stable of franchises (including a healthy backlog on the new Wii U Virtual Console) will give the console solid footing in the marketplace even if the Wii U doesn’t land every triple-A release available on competing platforms.

Sony needs to rebuild some credibility going into this next generation. The company seemed to have a lot of gall entering this one — introducing the original PlayStation 3 models at astronomical prices of $499 and $599 and assuming players would pay for it because it’s a PlayStation. While it looked like the most powerful of the current-gen consoles on paper, imagine the surprise when most multiplatform games ran better on the Xbox 360 because it was easier to develop for. Having a month-long security breach in the online network in 2011 was no confidence-builder, either.

Sony has been all over the map with how it wants to approach gaming. From the PlayStation Move to crossplay with the PS Vita, it hasn’t really delivered a knockout punch anywhere. I see some promise in the fact that Sony says it will develop the next PlayStation without using its own proprietary technology. Hopefully, that will make the next console easier to develop for and result in more consistent quality across games on the system.

I don’t see Sony having a proprietary medium to hinge to its next console the way it did the previous two generations with the DVD and Blu-ray discs. Sony has announced it is developing a multichannel online network for streaming video content. Last year, it also bought online game streaming service Gaikai. I would imagine both products will find their way on to Sony’s next gaming machine. Hit the right price point and give gamers a more humble attitude, and the PlayStation could bounce back nicely — especially since the platform has as many exclusive quality franchises as Nintendo does.

Microsoft seems to know what it wants to do with the next-generation Xbox. Whether that resonates with the consumer is unclear, but its plans seem nothing short of transforming the way you interact with entertainment in your living room. Xbox is heading into the next generation with the strongest online gaming community, Xbox Live. It’s also successfully transformed that marketplace from strictly a gamer’s paradise into something more appealing for people who want a platform for movies, music, and other streaming content in one box.

I see Microsoft getting smarter with how it integrates its Kinect peripheral into the gaming experience. Even though Kinect started life as an answer to the Nintendo Wii’s motion controls, it had little use for gamers who were content to sit still while playing. I personally have only experienced two things while trying to play on the Kinect with my kids: boredom and pain. The next-gen Kinect seems to be on track to register more subtle player movements — not the mention the fact that Microsoft might have plans for it to project images out into your living room.

Microsoft could stand to develop a few new in-house intellectual properties as it’s been riding the Halo horse for a very long time now. I do think we’re going to see some unique stuff from the Xbox outside of games. I expect the console will be a hub for exclusive programs and streaming entertainment options. I haven’t been to Microsoft headquarters myself, but I’d wager a guess the phrase “total entertainment package” has been thrown around in a few staff meetings.

Regardless of the console, this next generation could see the end of a constant stream of on-disc $59.99 releases and a move toward a series of shorter, cheaper downloadable entries. Telltale’s 2012 adventure game The Walking Dead was well received by the gaming public and was broken into five episodes that released throughout the year. I don’t see why this wouldn’t be a viable distribution model for most if not all games on the Sony’s and Microsoft’s platforms. My guess is that Nintendo will avoid this strategy at least with first-party games largely because it can get people to pay full price for a new Mario or Zelda, no problem. If you’re moving to one of the PC platforms mentioned above, I’m not sure you’ll have any choice but to opt for download distribution. These upcoming machines appear to be missing a disc drive.

Given all this, it’s difficult for me as a gamer to know where my preferences are ultimately going to fall in this next generation. For the first time, I can possibly see myself skipping out on console gaming if the Steam Box selection is compelling enough. Consoles, however, are no longer simply gaming devices, and in an era where I get more and more of my content through Internet streaming, a platform like Sony’s or Microsoft’s has to be a consideration as well. And no matter how much some would like to, you can’t discount Nintendo on anything in the games industry.

The video game market might be more fragmented than ever a few years from now, but that might not be a bad thing. Developers will want to make their games available on as many platforms as possible, and the smaller download market for games might make buying content easier and cheaper than it was in previous generations. It will be a tall order for any one company to dominate the evolving landscape from here on out.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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2013 is on course to be the year that PCs show you that a smoother, higher resolution world exists outside of the walled gardens of gaming consoles. Two products, one of which is supposed to hit the market later this year, tout themselves as respectable gaming rigs in packages that are not just small but as accessible as an Xbox 360.

Xi3′s so-called Piston is a full PC that fits nicely in a normal, adult-size hand. All of the components necessary for running a gaming computer reside within the diminutive, aluminum frame, largely thanks to the fact Xi3 has broken the motherboard into thirds for a compact arrangement. In addition, it reduces the processing hardware footprint with a quad-core AMD APU. Whatever else is inside (Xi3 hasn’t said as of this post) is equally tiny and doesn’t consume much power because the Piston draws only 40W, less than some of the old incandescent light bulbs burning in your basement.

While this little miracle might fit nicely on your home office desk, Piston, it appears, has designs on your living room entertainment center. Xi3 says Piston works remarkably well with the online PC game distribution service Steam. Valve, the company behind Steam as well as noted games Half-Life and Portal, even invested some money into Xi3′s otherwise failing Kickstarter project.

Valve also primed the mill for this type of device with the development of Steam’s Big Picture mode last fall, an alternative user interface to the service that is designed for navigation with a traditional controller on a large HDTV. Anyone who bothers to lug their PC tower — or at least a really long HDMI cable — from his work station to his television has, in theory, been enjoying access to his Steam game library in the living room for a while now. Xi3 promises its device will streamline that transition; although, you should remember not all PC games automatically support controllers.

For those of you who prefer your gaming PC to be a bit flatter, Razer (a company that sells PC gaming peripherals and at least one high-end laptop) will soon release the Razer Edge, a Windows 8 tablet with enough oomph packed inside to run some of the most demanding games currently on the market.

Starting at $999, Razer Edge gives you a tablet with an Intel Core i5 1.7GHz processor, 4GB DDR3 RAM, an Nvidia GT 640M LE graphics card and 64GB of storage. A Pro version bumps up the specs on all fronts. You can also attach the tablet to a number of peripherals (at an extra cost, of course), which includes a docking station for play with controllers; a keyboard for the MMO enthusiast; and, most uniquely, the Gamepad Controller that attaches a set of handles adorned with thumbsticks, triggers, and buttons on two sides of the tablet in the landscape orientation.

Outside of gaming, the Razer Edge is an otherwise fully functioning Windows 8 tablet, so you’ll never want for the ability to put together a PowerPoint presentation.

If you’re a truly hardcore PC gamer, by now you’ve spotted all of the drawbacks to these setups and have likely lost interest. There’s a reason for that. These aren’t PCs made with you in mind. You’ll continue to tinker away, slotting and wiring components into that big, ugly black box of yours year after year, anyway. PCs are working on asserting themselves as gaming machines for the masses — of which you are certainly not.

They are seeking people who don’t know what overclocking is or obsess over frame rates; people who simply want to sit down and play a fun game, the same as they can on an Xbox 360. Nevermind that these powerhouse tablets will likely get better and faster chips in them each year, but the one you bought last year, sadly, can’t be upgraded. Nevermind that unusually small PC components might require more time and money to get than your standard graphics card at the local Best Buy.

The convenience factor in these units still requires some degree of compromise when it comes to raw horse power, but it’s an undeniable fact of the human eye that even a basic build of a specialty gaming PC renders and plays games better than current-gen consoles.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Premier game developer Valve shook the electronic entertainment world on Monday when it said that it had was working on its own open system console, which the press has dubbed the “Steam Box.” Rumors had been building for some time, creating huge excitement.

Gabe Newell, chief executive of Valve, acknowledged in an interview with The Verge that his company was working on the Steam Box and had invested in Xi3, which has a new gaming PC, called Piston, on display this week at the Consumer Electronics Show in Las Vegas.

We interviewed David Politis, chief marketing officer at Xi3, a maker of modular computers that can be used either as server computers, regular PCs, or gaming PCs. Piston can run either Linux or Windows.

To be clear, the Piston computer pictured is probably not the exact same thing as the Steam Box, which in pictures looks very different. However, Xi3 is able to pack a lot of firepower in this little device. That makes the Piston’s specifications and general size a proxy for whatever Valve finally ships. Newell said that the Steambox will run the Linux operating system.

Politis showed us an exclusive case (pictured at top) for the machine, which can be configured with any kind of design on its shell cover. We looked around but didn’t see any cases with the name Steam Box on them. But note the thematic similarity of the names “Piston” and “Valve.” Wink, wink. Politis acknowledged that Valve has invested in Xi3, but he said he couldn’t talk about a Steam Box and has a non-disclosure agreement with Valve.

At CES, Xi3 unveiled the 7A series game machine coming this spring.

The specifications

Piston packs a lot of muscle in a tiny space. It fits in a box no larger than the size of your hand. The device uses the Advanced Micro Devices “Trinity” combo platform which combines a microprocessor and graphics functions in the same chip.

The machine has a 3.2-gigahertz quad-core microprocessor and 384 programmable graphics cores. It comes with 8 gigabytes of DDR main memory. It can support three monitors natively and two mini display ports. It has four USB 3.0 ports, four eSATA ports, and four USB 2.0 ports. And it has 64 gigabytes to 1 terabyte of storage, depending on price. It has three programmable audio ports. The storage can transfer data at a speed of 12 gigabits a second at the high end.

The device can run 4K resolution video and graphics. Piston consumes only 40 watts, compared to 1,000 watts for some of the high-end game PCs.

“You can use this for gaming,” Politis. “To fit it inside this form factor took a little bit of magic.” The device has 13 patents granted and the company has applied for 1,000 more.

One of the most interesting aspects is its modularity. You can pull apart the chassis by removing four screws. You can then snap out the circuit board (above left) and replace the central processing unit. You can also wire multiple devices together in a server rack for high-end data center processing (pictured right).

But this machine isn’t going to be cheap. It will cost $999 — higher than its earlier Series 6 version that currently sells for $499. Politis said Piston will ship in March. Newell told The Verge that he wanted a machine that is quiet and without a big optical media drive. The Steam Box has to have low latency and be open. Newell described Windows 8 from Microsoft as “unusable.” He said that the Steam Box will run a regular web browser and be able to access services like Netflix via the web.

Check out our video interview with Politis.