The launch of the next-generation consoles isn't too far away, and Valve wants to get in on the party, having recently shown off the design of their prototype Steam Machine. The system, which has been developed as a reference design and likely won't be released to the public, features impressive hardware in a case similar to that of a standard home console such as the Xbox 360.

Valve has managed to cram an Intel Core i7 CPU, Nvidia GeForce GTX 780, a full power supply, motherboard and hard drive into the relatively compact case, which features a unique cooling solution. Rather than your traditional desktop PC, Valve's Steam Machine has three cooling zones that are separated by plastic: the GPU vents air to the back, the CPU to the top and the PSU out the side. Each zone also pulls air from different areas, which should help cool each part reasonably well.

SteamOS, a Linux-based operating system that will be preloaded on every Steam Machine, looks very similar to Steam's Big Picture mode, and is said to function well. Gamers will have access to the full library of Steam games, either through their Linux ports or streaming from a Windows-based PC in your house. If you'd prefer to install Windows to have native access to your game library, the Steam Machine is essentially a small form factor PC, so you should have no trouble doing that yourself.

As far as the Steam Controller is concerned, the Valve-manufactured unit will be bundled with every Steam Machine, and it will also be available to purchase separately. The Controller will take a bit of getting used to, according to those who used it at Valve's demo event, but its touchpads are surprisingly accurate compared to traditional analog sticks seen in the PlayStation and Xbox gamepads.

Valve will be making more announcements regarding Steam Machine hardware and software partners at CES 2014, with systems expected to go on sale mid next year in a range of different performance brackets and sizes.