Valve may be designing new console "Steam Box"

 Their cut from Steam is nowhere near the $10/unit Microsoft/Sony get from sale of their games. Anyway:

"We're prepping the Steam Big Picture Mode UI and getting ready to ship that, so we're building boxes to test that on," he said, referring to a new Steam interface that will make the online gaming service easily useable for people who want to play Steam games on a PC that's connected to their TV. "We're also doing a bunch of different experiments with biometric feedback and stuff like that, which we've talked about a fair amount.

"All of that is stuff that we're working on, but it's a long way from Valve shipping any sort of hardware."
Lombardi refused to flat-out say that Valve isn't working on a console. When I posted it to him this way--"What you're saying is, there's definitely nothing coming any time soon, nothing at GDC or E3, but what you're not ruling out is the possibility that, hey, maybe some day Valve would make hardware. "-he said, "I think that's accurate."

Head dude from Valve squashed these rumors today, it's not happening, at least no in the near future. Phone Post

It aint happening, sorry folks.

Maybe in the future. Phone Post

I welcome more competition to the console market.

This doesn't seem like it though.