A few weeks ago, Valve CEO Gabe Newell was asked about the company's console ambitions. He answered saying that we would learn about that later in the year. It's slightly later, and it appears we know more about what the company is up to - a handheld, portable gaming PC, which is currently referred to internally as SteamPal.
Handheld gaming has long been a big part of the console landscape. But, unless you're Nintendo, they have generally been a failure. Whether you're Sony with the dedicated PS Vita, or you're Nokia with the N-Gage gaming phone, it doesn't matter what you're doing, it isn't going to work. But, the SteamPal is something completely different - it is a full PC (kind of), which will run Steam and allow people to play a portion of the games available in their existing library.
Currently, no major Western manufacturer has jumped on the Nintendo Switch style design for a gaming PC. Several Chinese manufacturers offer similar products, but nothing from the West, unless you could the Alienware prototype we saw at CES 2020. So, while Valve's hardware ambitions have failed in the pastm this one is entering a space where there is interest and little competition.
Unfortunately, the prototype hardware is currently targeting Linux and not Windows. This means that it isn't exactly what anyone would call a full gaming PC. It also means that there is a big chunk of games that will be unplayable - despite Vavle's attempts to solve this through services like Steam Proton. It is also likely to run on a SoC, so expandability is going to be out the window as well.
Ultimately, the device is still in a prototype stage, so anything about it is up for change. For example, as Microsoft and Valve renew their friendship, it's possible that the company could offer a deal on Windows to prevent the Linux installation. It could also turn out to be a bust, and the prototype could go into the same halls of history as Razer's Project Valerie. We will see later this year when Vavle makes its official anouncement.