Valve had developed next-generation VR headsets three to four years ago, but abandoned those designs because they were too large and cumbersome. According to Valve engineers Joy Lyons and Jeremy Selan, the company opted to return to the drawing board to create more lightweight and comfortable devices that aligned with their vision for future products.

"We had the headsets ready three, four years ago," Selan stated, "and they were big, bulky devices. They were more in the style of the Valve Index, and we put them on, and we're just like, this doesn't feel like what we would want the next round of our product to be."

The decision to delay new hardware came despite a recent downturn in VR headset sales, with shipments reportedly down year over year. Valve's priority was to ensure the product met their internal quality standards before release.

"The hardware engineers went back to the drawing board many, many times to finally achieve sort of the very small form factor, the comfortable, the lightweight," Selan explained. "Figuring out all the system trade-offs with regards to power versus battery weight, versus cooling, and thermals. So this was absolutely the fastest we were capable of shipping the device that we were proud of."

Lyons added that the development of portable systems like the Steam Deck played a significant role in the creation of the new VR headset. Lessons learned from the Steam Deck's launch, including work on emulation and the SteamOS operating system with Proton, have been integrated into the new device. This includes enabling x86 games to run on ARM hardware via FEX and supporting Android-based games through Lepton.

This combination of hardware and software advancements makes the Steam Frame a versatile device. It functions as a PC VR headset capable of wireless streaming and also as a standalone unit. Its ability to translate PC games to an ARM-based architecture and run Android titles, including those from the Meta Quest ecosystem, represents a significant step forward.

"I wonder if this one will run?" Lyons recalled of testing Android games. "And you download it, and you open it, and it runs, and you put it on the huge screen. That was the moment where it's just like, 'this is fun.'"

Selan shared a similar sentiment, noting that the Steam Frame became his preferred device for use at home, signaling a turning point in its development. "And so, for me personally, that's when sort of a switch flipped in my head, and I was like, 'This is going to be a real thing'."