Impending Windows 8 'catastrophe' behind $3bn game maker's shift to Linux

Windows 8 will drive out 'some of the top-tier PC/OEMs… margins will be destroyed' - Valve CEO

Computer game platform maker Valve is to port its Steam gaming and distribution platform to Ubuntu Linux in a move intended to protect the company from the impending "catastrophe" of Windows 8.

The availability of the Steam platform will make the latest games available on the open source operating system for the first time - making Linux a potentially viable migration option for ordinary consumers.

The shift by the company, valued by Forbes at $3bn (£1.9bn), is all the more significant because co-founder and chief executive Gabe Newell spent 13 years at Microsoft. Newell was being questioned on stage by Microsoft's former vice president of game publishing, Ed Fries, at an event co-sponsored by Google Ventures, the venture capital investment arm of Google.

"The big problem that is holding back Linux is games. People don't realise how critical games are in driving consumer purchasing behaviour," said Newell. "We want to make it as easy as possible for the 2,500 games on Steam to run on Linux as well. It's a hedging strategy."

Part of the reason for the move is the potentially disruptive effect of Windows 8 when it is released in October. "I think Windows 8 is a catastrophe for everyone in the PC space. I think we'll lose some of the top-tier PC/OEMs, who will exit the market. I think margins will be destroyed for a bunch of people. If that's true, then it will be good to have alternatives to hedge against that eventuality."

For many software vendors, the Windows Store that will be built into Windows 8 represents a potent threat to their livelihood. It will give Microsoft a direct link to software-buying purchasers for the first time. Microsoft is believed to be demanding a 30 per cent commission from developers wishing to sell their software in the Windows Store.

This represents a direct threat to Valve's business model. For other developers, the level of knowledge about consumers and their software preferences that Microsoft will be able to glean from the store will hand it an unprecedented level of power over its own eco-system.

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Impending Windows 8 'catastrophe' behind $3bn game maker's shift to Linux

Windows 8 will drive out 'some of the top-tier PC/OEMs… margins will be destroyed' - Valve CEO

Furthermore, Newell implied that Microsoft may be tempted to charge a monopoly rent or even close its platform to outsiders. Indeed, this is the only way that software will be downloadable to the Windows 8 RT version for ARM-based tablets.

This is the first time that a major software developer has articulated serious concerns about the forthcoming operating system.

Newell also added that touch screen will be an interim technology, giving way in as little as 10 years' time to gesture-based computing - but that the keyboard and mouse will endure alongside all of those input methods.

Newell founded Valve, developer of the Half-Life series of games (pictured), in 1996 after cashing in share options at Microsoft, where he had worked since 1983. Valve both develops and publishes its own games, as well as providing a distribution platform, which currently boasts some 40 million users.

Privately held, the company does not disclose financial data, but independent analyses suggest that Steam alone turned over more than $1bn (£640,000) in 2010, while the company has also been responsible for developing a number of hit games in recent years.

Newell claims that the 250-person company is more profitable on a per-employee basis than Apple, Microsoft, Google or any of the other giants of the technology industry.