Valve is said to be working on hardware and software specifications for a "Steam Box;" which will actually be a unified console standard available to interested hardware manufacturers, rather than a specific console produced by Valve itself. Similar arrangements have been tried previously in the home console market, most notably the Philips CD-i and 3DO Interactive Multiplayer standards. Should rumors be believed, the Alienware X51 has already been developed to Steam Box standards and will be retroactively infused with Valve's software once it becomes available.
The hardware backbone is currently said to be an Intel Core i7 with eight gigs of RAM and an Nvidia GPU. Devices built on the standard will reportedly run any PC title, and will also support other digital distribution platforms like EA's Origin service.
A patent for a controller with interchangeable parts, filed by Valve, has also been discovered by The Verge. Diagrams show functionality strongly reminiscent of the MLG Pro controller by Mad Catz, as well a use case depicting interaction with a local gaming device and a networked "gaming server device."
The rabbit hole goes much deeper, however, as "sources" claim that mood-tracking biometric systems will be implemented into the system, either in the form of bracelets or directly into Steam Box controllers. This would allow a game to measure the player's pulse rate and galvanic skin response, the gameplay/design implications of which are numerous.
Should all this prove accurate, Valve's official announcement will happen sometime between GDC and E3, and will cause the fabric of reality to fold in on itself.