I think it should be noted that the SteamOS is mostly regular Ubuntu. When you look at the valve repo, there are very few packages in the repo.
I anticipate that it would be something along the lines of Lubuntu or Xubuntu where it's mostly the same OS as Ubuntu but configured to be lean and only ship with the packages that are needed to accomplish its goal, which is to get you to Big Picture as soon as possible after pressing the power button. I figure the ISO when it is released will be very small.
Also since it would be mostly the same as Ubuntu, I think you would be able to turn the default SteamOS into regular Ubuntu relatively easily and Steam Desktop can be treated like another desktop environment that sits alongside Ubuntu's Unity or LXDE.
To educate the non-Linux users: Desktop Linux supports multiple desktop environments. A desktop environment is a different user interface. So when you get to the login screen you normally login to Ubuntu's default Unity which is the one that looks like MacOSX with the dock on the left hand side. But it is really easy to install a lighter one like LXDE and then you can just choose it at login.
I imagine that since it's a Linux distro and will be relatively open, Big Picture will be the default desktop environment on a standard Ubuntu but with no Ubuntu or Canonical branding anywhere, and it would be trivial to add the Ubuntu Unity or any other desktop environment to it and just switch back and forth.
I think that's what people are confused about. The interface is going to look console-y, but it will still be a PC OS. I think you'll be able to do all the stuff that you can on any other PC operating system, like install packages, install desktop environments, run a browser, install VMs, run a server, all that nerdy stuff.
And as for the people who think that there aren't PC gamers that want a console-like experience, I can't speak for other people, but for me, the older I've gotten the lazier and wearier I've gotten. I want to have the option of upgradeability and maintainability that comes with PC gaming, but I don't want the hassle of actually having to take care of the PC. I want something in-between console and PC. I think there's a space for this.
And the valve approach makes sense, take the most tinkerable OS in Linux and like Ubuntu, make up the difference in the ease of use department, but take it to another level for gaming than Ubuntu would.
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