Should you feel threatened? Do you design consoles or program console titles? If not, what exactly about the potential success of the ATV, for gaming or any other living room purpose, is supposed to threaten you?
That said, I do seem to remember a few years back when some executives at Motorola, Nokia and RIM mentioned that they didn't feel at all threatened by the idea of Apple making a phone, because it was unheard of for a company to walk into a new market and make a big impact right away, and it was obvious that big, established companies with a long history of designing telecommunications devices were going to have a big advantage in that segment for a long time to come.
Maybe people should in general have a slightly lower threshold for feeling threatened. Perhaps not as low as Newell's, but then again, this is a game he has a clear stake in.
What I find most interesting is that the threat is described mostly as an ideological one; that if Apple somehow succeeds in competing against the console makers, this is somehow bad in itself as well as bad for Steam and Valve. Does Newell just think the console makers are weaker competition, and he'd rather have them to deal with than Apple?
I'm also still at a loss to describe what this Apple and Steam-fueled overthrow of console gaming is supposed to look like. Keyboards and mice are not taking over from controllers in the living room anytime soon, for reasons that should be obvious. Maybe something new will, but if so, we haven't really seen it yet. PC games on Steam can be, and are, played with controllers, but there's a good deal of overlap between the AAA titles available for each platform, and I'd be willing to bet a good portion of the long tail that's available on Steam but not on a major console contains the higher proportion of games that aren't made for controllers and are intended for keyboard and mouse.
If backporting decent controller schemes onto Windows games was that trivial, something tells me MS would have made more sincere efforts to bring more Windows games to the Xbox; or perhaps they were just insistent on trying to make their console the primary development target-- which for a fair number of developers they did, whether 1st party or not.
I have Steam on my Mac, an Xbox 360, and a few iOS devices around. I'm not sure where the Steam box is really supposed to add value to the ecosystem. I can't think of a controller-optimized title I could play on a Steam box that I couldn't already get on a console, or a non-controller-optimized title I could play on Steam but would prefer to on a Steam box rather than a Mac or PC. Where there are overlaps, I don't see where the Steam box has an advantage over the other platforms. Where there is no overlap-- people who right now only have access to one platform-- I don't see why Steam would be the primary pick.
I suppose it's not impossible that the Steam box (Steamboxen?) might grow the Steam market, but right now it looks to me like it's a living room machine designed for people who are already on Steam and think consoles are for idiots. Those people are already on Steam, though. If Steam boxes are subsidized, Valve just ends up costing themselves money to retain their own clients, and if it isn't, I'm not sure how it competes with consoles on price and specifications. Why are people who own PlayStation 3s and Xbox 360s now supposed to buy a Steam box for their next living room gaming hardware instead of the next iterations of either of those platforms? If Valve is trying to grow the market, why would people who have so far avoided consoles buy a Steam box at all?
I can easily get why Valve wants to do these things; it just isn't clear to me how, right now.