According to Engadget and The Verge, Valve will announce the first Steam Machines during the CES trade show in January. These devices will be produced by third-party hardware partners, and will range from low-end consoles--most likely with integrated graphics--to high-end gaming rigs. The first commercially available Steam Machines will arrive in mid-2014.
For now, Valve is testing out SteamOS, the company's Linux-based gaming operating system, on prototype hardware given out to 300 lucky users. The prototype is a little bit larger than an Xbox 360, The Verge reports, and it packs an Nvidia GeForce GTX Titan graphics card. The details on this particular Steam Machine are academic, as Valve has already said that it won't sell it to the masses.
As for game support, Valve is also staying quiet on which publishers will provide the necessary Linux ports for SteamOS. The availability of Linux games for Steam still lags far behind Windows, so Valve is building a workaround where users can stream games to their Steam Machines from another networked PC. (Valve hasn't yet demonstrated this capability or given details on how it works.) Obviously the goal is to have more native SteamOS game support, and Valve says news on that front will also come during CES in January.
Valve did drop one other related nugget of information, on the possibility of Valve creating its own exclusive SteamOS games to promote the platform. Valve's Doug Lombardi told The Verge it's "against our philosophy to put a game in jail and say it only works on Steam Machines." If Valve were to be working on, say, Half-Life 3, Lombardi's comments suggest that Windows gamers won't be left out.
Valve had been hinting at its living room gaming plans for months, before announcing SteamOS and Steam Machines in September. With the company now touting more active users on Steam than on Microsoft's Xbox Live service, the console wars should get a lot more interesting next year.