I initially thought it would be better to go with Nvidia to provide some kind of "competitive advantage" over the AMD-based consoles, but that's going to be hard to do when PC's tend to be unsubsidized, and when the same level of hardware is actually weaker because of the DirectX/OpenGL overlays.

Then, after I saw AMD announcing the Mantle API, I realized, it would be a perfect match for the Steam Machines, to get some of that console-level performance for more or less the same price. John Carmack agrees that Valve+Mantle would be a deadly combination:

http://www.tomshardware.com/news/amd-mantle-api-xbox-one-pla...

Mantle is the future of gaming machines. It will not create lock-in, because both Nvidia and Intel will scramble to create something similar, or even compatible with AMD's API (which will be open soon), and what this will lead to eventually is a reset of standardized overlays for GPU hardware, that will support AMD, Nvidia, Intel, and probably even ARM GPU's, but with much lower overhead than DirectX and OpenGL.

http://www.anandtech.com/show/7371/understanding-amds-mantle...

http://semiaccurate.com/2013/09/30/amds-mantle-biggest-chang...