I think Valve has a very good shot at taking on the console market.
I'm not really sure it's meant as direct competition against the console market. Though the announcement of the "box" part of the actual Steambox may change my opinion of that. If the likely soon to be announced Steambox is just going to use the Linux based SteamOS then you'll still need a computer powerful enough to run the games that exists separately from the Steambox itself. It definitely creates a much more convenient and probably quiet means of playing with Steam on your TV, but without box specs it's hard to say how much of a computer you'll need to support it. Plus it's all well and good to say that AAA and other titles are already targeting SteamOS for distribution, but it doesn't mean much until they release the games for it. Either way it's an exciting new chapter in gaming!
"In matters of principle, stand like a rock; in matters of taste, swim with the current." -- Thomas Jefferson