Before we get started, first thing's first: the hardware beta Valve is currently running is just that, a beta. This means everything you're about to read is subject to change. Heck, we already know Valve is partnering with multiple manufacturers to produce various hardware configurations, so who can say what elements will stay the same and what will change?
That being said, we're going to try and give you an idea of what to expect based on what we've experienced.
Pictures of Valve's Steam Machine flooded the Internet when hardware beta participants received their shipments, and what we saw was pretty much what you'd expect: a big, black box. The front of the Steam Machine we tried featured a minimalist design with just two USB ports and a large, circular power button surrounded by a larger ring.
The center circle is a physical button, so in that sense the Steam Machine beta hardware felt a bit more old-school than some of our modern, touch-oriented technology. Once powered on, a thin, white ring lit up to indicate power. The thicker part of the ring that goes around the power button doesn't seem to be anything more than visual flair.
While there will be many different Steam Machines with varying internal configurations, the one we experienced was likely the prototype for a higher-end model. Powered by an Intel i5 processor clocked at 3.20 GHz with 16GB RAM and an Nvidia Geforce GTX 780 with 3GB of graphics memory, the system might not be the fastest horse in the race, but it's no slouch, either. The only real oddity here was the use of an external WiFi antenna instead an internal one.
If looking inside wasn't an option, just looking at the rear panel should give you an idea of how much technology was shoved into this box. There were multiple video outputs, including HDMI and DVI, along with inputs for mouse and keyboard, ethernet, and USB. Suddenly an external WiFi antenna makes a lot of sense; maybe there just wasn't room inside.
The same cannot yet be said of the controller.
Ever used a mouse with a trackball in it? That's what sliding your thumbs across the surface of Valve's controller felt like. The surface of each thumb ... pad? Thumb place? ... was a single, solid piece, but we could still feel a sense of sliding and spinning underneath the thumb, particularly when we gave a good, hard flick to any direction. There were tiny clicks for a bit of resistance, and listening to them also gave us an idea of how fast we were turning the wheel.
We played Hotline Miami and Portal with the controller, and found the experience lacking on both, though the issues were less obtrusive in Valve's signature puzzler. The lack of a physical stick means no resistance, and that takes some getting used to. We also noticed that for people with larger thumbs, there may be an issue of unintentionally sliding across the pad while reaching for the face buttons.
The controller can be used on machines other than those from Valve, and the Steam Machine, in turn, can receive input from other manufacturers' controllers. We were shown how a wireless Xbox 360 controller could connect to the Steam Machine as easily as it could to any modern PC, and indeed it functioned just as well, with no noticeable lag or issues. The 360 controller, however, did register as a controller.
Since the Steam Machine saw the 360 controller as a controller and the Steam controller as a mouse and keyboard, it was possible to more or less "confuse" a game. I was able to take control of Chell in Portal by using the Steam controller while someone else used the Xbox 360 controller. Unintended benefit? Something to be patched out? Material for trolls in the household? You decide.
PC-centric gamers may come to love the quick and painless configuration of Valve's controller, but right now, we'd be hard-pressed to say it's as or more accurate than the mouse and keyboard they already own. Console gamers eyeing a Steam Machine should likewise be aware that the controller, if it remains as is, will likely be different from any controller they've ever used before. Either audience has a learning curve ahead of them if they want to use the Steam controller, but at least it doesn't look like they'll be forced to use it if they don't want to.