As I have said before. They are most likely working on devices to be used with PCs that are connected to a TV using the Big Picture Mode UI they have been working on. They won't be making their own branded PC but they will be making use of systems like the Alienware X51 which is a tiny bit larger than the original PS3. Valve wants to bring PC gaming to the living room and is making the new optional UI for Steam to allow this and by the looks of things they will be making controllers too.
tl;dr: Valve is inventing shit to let people use their PC as a living room console.
tl;dr: Valve is inventing shit to let people use their PC as a living room console.