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Innovation Strategy Example: The Steam Deck Gaming Device

Innovation Strategy Example: The Steam Deck Gaming Device

Can Valve Compete with Nintendo? Does it Want To?

In addition to its normal approach of selling software, Valve has moved into selling hardware: the company released the Steam Deck in 2022. The Steam Deck is a handheld device that allows you to play computer video games wherever you wish. Prior to the Steam Deck, there were no easily available handheld devices one could play computer games with.

For Valve, the Steam Deck helps it better compete with Windows, which is the dominant operating system software for computer gaming. For the user, the Steam Deck lets you enjoy computer video games without the necessity of a laptop or dedicated gaming rig. Therefore, the Steam deck is an innovative strategy example of how Valve has created a new way to meet the existing needs of their consumers. Yet, the Steam Deck isn’t for everyone.

 By comparison to the Nintendo Switch, which is also a handheld gaming device, it becomes clear the Steam Deck is far more of a niche product, not for the average gamer.

Innovation Strategy Example Success… to a Point

Currently, the Steam Deck is projected to sell over 3 million units by end of 2023. This is more than enough to suggest that the release of this product has been a success for Valve.

In contrast, released in 2017, the Switch’s lifetime sales to date are over 122 million units sold. In other words, Switches have sold more often and in greater quantity than Steam Decks.

This huge difference in sales quantity likely reflects, in part, a huge difference in price. The Switch’s different models range from:

  • $199, (Nintendo Switch Lite)
  • $249 (Nintendo Switch)
  • $349 (Nintendo Switch -OLED Model)

The most basic model of the Steam Deck starts at $399, with two more expensive models for $529 and $649. In sum, the least expensive model of the Steam Deck costs $50 more than the most expensive Switch model. One risk to this innovation strategy example’s ongoing success is that the Steam Deck is ultimately a niche product.

Innovation Strategy Example Customer Segments

The Steam Deck is not for every gamer, and the brand accepts its niche nature. Valve designer Greg Coomer has explicitly noted the company’s gaming device isn’t competing with the Switch, because it targets experienced gamers already using the Steam platform:

“We tried to make all the decisions really in Steam Deck that targeted that audience and that served the customers that were already having a good time interacting with the games that are on that platform, on our platform. That really was how we were making our decisions. We’ve ended up with a device that cosmetically shares some traits with a Switch, but that just was… it’s kind of an artifact of how we’ve proceeded down the design direction.”

In other words, while the Steam Deck has often been compared to the Switch, because they look like similar devices, they target very different consumers. Therefore, this innovation strategy example shows that a specialized product can be successful with the right strategy and expectations. The Nintendo Switch targets audiences of casual gamers, and these consumers may never have played a computer video game, or even heard of Valve or its Steam platform.

Innovation Strategy Example: The Steam Deck Gaming Device

An Innovation Strategy Example that Shows Competitors the Way

Another risk to the Steam Deck’s success are all the competitors it has inspired. Valve has demonstrated that there is a demand for handhelds within experienced gamer audiences. In response to the release of the Steam Deck, new handheld devices for computer video gaming have been announced. Here are a few:

  • ASUS Rog Ally
  • AYN Odin Pro
  • ONEXPlayer
  • AYANEO, with 3 different models

These are direct competitors to the Steam Deck, and as a result, necessarily present risk to the Steam Deck’s future success as an innovation strategy example. Nintendo’s Switch may not be a significant competitive threat, but other devices will certainly make a go at it.

For more real-life examples, visit our Innovation Strategy Resource page. And sign up for our newsletter to receive monthly articles from Insight to Action experts.