Something everyone here seems to not realize is that, if you add up everyone you know and consider a "gamer", and add that number to all the ones on these threads and forums in all the gamer websites, you'll still only see the tip of the iceburg regarding the "tens or hundreds of millions of units" that need to be shipped.
The Valve community adores valve, sure, but a lot of us have perfectly good pc's. I don't need another platform for this. Do you?
Valve has a good consumer base, and they therefore have a chance. I don't think that Microsoft is kidding when they say it helps to have deep pockets. Imagine another company trying to combat Apple's iPad. They'd have to be able to afford losing millions. Bill Gates can afford it. Can Valve? I hope so.
Finally, this statement doesn't actually sound mean-spirited to me. "Any new entrant, without being specific to any company or brand or product, to the games industry is ultimately a good thing, because it helps validate, grow and enhance consumer excitement and consumer interest in our category." What he means is, having a bigger potential consumer base is better than having a smaller guaranteed one. A lot of people here will get involved in the console wars, hoping that Wii loses interest, hoping the PS3 gains no traction, hoping the Xbox gets tired, hoping the WiiU bombs, and everyone who wishes for the failure of a video game participant is unable to see the bigger picture.
I don't think Microsoft wants Valve to fail. They'd probably have a different attitude towards an Apple combatant.