I think that valve would be aiming at the console player. a pc experience for the console player, so it wouldn't run every game at full specs and wouldn't necessarily have to run background tasks. I think valve knows hardcore pc gamers would prefer building their own pc.

if this "console" becomes a huge success, it may stagnate pc gaming, but then again, it's what consoles are doing now anyway.

This reminds me of how M$ came into the console gaming industry. M$ saw an opportunity to offer gamers a console experienced, which borrowed heavily from PC. Xbox intruduced: Built in HDD, NIC card and Xbox Live (lobbies, online chat and DLC on console). Now Valve see and oppotunity to jump in with a Digital Destribution model and their dream of true Cross Platform Gaming.

Valve now has the the largest sector of the PC maket using their service. They are thinking they can do the same on the console market. Time will tell. I will remain skeptical until I see the price, how it works and the actual size compared to what Sony and M$ offer with their new consoles. I like the fact that Valve is a games company and that they would be their focus, but they will need to control cost of hardware and the OS in order to compete. We shall see.