Response to the Steam Controller varies a lot. I have a hypothesis on it.
First, why Linux and SteamOS? Windows 8 isn't such a disaster for games as the Windows App Store (if successful) could be a disaster for Steam. Valve wants independence and revenue as much as any other company.
The controller has a stated purpose: "[bridging] the gap from the desk to the living room without compromises." I think there's another one.
On some site (sorry, forgot which), I saw a comment claiming that there is no battle for the living room but rather that the battle is in mobile. I haven't looked up market sizes, but Sony, Microsoft, Apple, and Google all have at least some belief in the value of the living room.
However, mobile is an important space. We see Microsoft betting their reputation on this.
What can Valve do here? Android is as open as Steam Machines will likely be. Do they dodge Android because their focus is serious gaming? Yes and no, I think.
They care about the serious gaming segment, but they've also already lost on iOS and Android. Apple and Google already have app stores. Steam can't compete there. That's what they want to avoid with Windows. They want Steam to be its own power.
This is where the screen on the Steam Controller comes in. I don't think on its own it will be much more exciting than the Wii U GamePad's screen is. It competes with the main display. However, if the Steam Controller is hackable (stated goal by Valve), surely some people will make games just for the controller. And if the controller is a success (open question), that might become meaningful.
If the Steam Controller succeeds, it provides a rich IO platform that might possibly become a successful mobile platform of its own.
Yes, this is a crazy hypothesis, but it allows an avenue for Valve to move in this direction without making it a major immediate focus. Having future options might not hurt.
