[quote name='JasonTerminator']That doesn't really sound like a confirmation of a Steam box to me. At least, not an official one. It'll be nice if it does happen though, if only because it'll force the competition (XBL store and PSN store) to lower the damn prices on their digital content.[/QUOTE]
He also expects companies to start selling PC packages for living rooms next year—setups that could consist of computers designed to be hooked up to your TV and run Steam right out of the gate. And yes, Newell said, they'd compete with next-gen consoles from companies like Microsoft and Sony.
"Well certainly our hardware will be a very controlled environment," he said. "If you want more flexibility, you can always buy a more general purpose PC. For people who want a more turnkey solution, that's what some people are really gonna want for their living room.
To me, this quote says that they're making a gaming console based on Linux. You turn it on, it goes into Steam and probably won't do a whole lot else. So you're essentially buying a digital content only console that will share it's steam library with your PC. This has the potential to cause a lot of market disruption. It will probably come boxed with a controller and you can attach USB keyboard/mouse to it if you want.
He's admitted that Valve has it's own hardware and to assume that they aren't going to put out a console next year when other PC consoles + the Xbox 720 and possibly the PS4 come out would seem foolish on their part. It looks like a confirmation to me, the only thing that's a stretch is assuming Valve is putting it out next year but I think they will.