A few days ago the rumors of a VALVE CONSOLE came about, but those were quickly shot down. According to KOTAKU Valve isn’t even close to anything along the lines of making hardware. That sucks to hear, it would have been cool to have a compact extreme console gaming machine I could use for PC games, but alas, we shall wait.
What they ARE working on is the Steam Big Picture Mode UI. What that does is makes it easier for people who want to play PC games through their computers onto TVs. Which sounds awesome enough. Seems like Valve has always got something up their sleeve. Don’t forget, just because they aren’t currently making a console, doesn’t mean it can’t happen in the future.