I guess according to the description on Wikipedia "The term "video game console" is used to distinguish a machine designed for people to buy and use primarily for playing video games on a TV" - this device would be classed as a console.
What's interesting is this device allegedly runs off the shelf PC hardware, can play any PC game, allows for rival services and has no dev kit or licensing. I'm going to assume this device will have to run Windows to meet those goals. Therefore all valve have done is create a standardised PC.
I can only see this taking off if they can sell enough to keep the price down. Valve could become some serious competition to media PCs and standard games consoles.