I know people have been speculating on a "Steam Box" Valve console for some time, but it's possible the project was never a console in the first place. Regardless, Valve's making a PC - the Xi3
Source: http://www.gameinformer.com/b/news/archive/2013/01/07/xi3-valve-announce-new-steam-powered-pc.aspx
The source contains some pictures and a seperate link to the original press release.Today Valve and hardware partner Xi3 announced they will showcase a new "development stage computer system" this week at CES. The press release didn't share the PC specifications, but it will be optimized for Big Picture mode and be housed in one of Xi3's modular systems like the one shown above (most likely with a different array of ports). This chassis is roughly the size of a grapefruit and is built to mount on the back of displays.
"Today marks the beginning of a new era for Xi3," said Xi3 CEO Jason A. Sullivan in a press release. "This new development stage product will allow users to take full-advantage of their large high-definition TV displays for an amazing computer game experience. As a result, this new system could provide access to thousands of gaming titles through an integrated system that exceeds the capabilities of leading game consoles, but can fit in the palm of your hand."
Source: http://www.gameinformer.com/b/news/archive/2013/01/07/xi3-valve-announce-new-steam-powered-pc.aspx