Valve said that the prototype machine is a "high-end, high-performance box, built out of off-the-shelf PC parts". It is also fully upgradable, allowing any user to swap out the graphics processing unit, hard drive, central processing unit, or even the motherboard if they want to.
Last week, Valve unveiled its new game controller, which uses two trackpads and provides haptic feedback.
The Steam Machine measures 12 x 12.4 x 2.9 inches and will ship with a mixture of GPUs - some with NVidia Titan, some GTX780, some GTX760, and some GTX660. It will also have a mixture of CPUs - some boxes with Intel i7-4770, some i5-4570, and some i3.
The console will have 16GB of RAM for the CPU and 3GB for the GPU. It will also have 1TB/8GB of hybrid SSHD storage, and an internal 450w 80Plus Gold power supply.
Valve will ship 300 of its prototype consoles to Steam users. However, the Steam Machines available for sale next year will be made by a variety of companies - some of which will be capable of meeting the demands of lots of Steam users very quickly, while others will be more specialised and lower volume.
The hardware specs of each of those machines will differ from Valve's prototype.
"This design is not meant to serve the needs of all of the tens of millions of Steam users. It may, however, be the kind of machine that a significant percentage of Steam users would actually want to purchase - those who want plenty of performance in a high-end living room package," the Valve said in its blog.
"Many others would opt for machines that have been more carefully designed to cost less, or to be tiny, or super quiet, and there will be Steam Machines that fit those descriptions."
"We expect people to redesign the machine, too. Both from a technical perspective, deciding on different components, and from an industrial design perspective, changing the enclosure in interesting ways," the company added.