Keep in mind that Valve doesn't need to replace Windows for gaming, they just need to replace Windows for - specifically - handhelds. That can happen regardless of the Windows PC market. I'd even argue that it's better for Valve if the PC market stays the way it is. It's the best of both worlds for them. After all, Valve makes the majority of their money selling games on Windows, which in turns boosts their handheld ecosystem. And given that Epic's store is a very distant second, it's almost impossible to avoid Steam if you're a PC gamer. I imagine a regular consumer is going to take that into consideration when looking for a PC handheld. Unless someone is deeply invested in Epic/GoG, Windows based handhelds can easily become a niche, and niches aren't guaranteed to last. You said it yourself, Microsoft has not done anything to stay competitive in this space. I don't want to say it's a guarantee, but there's a lane there where Steam handhelds completely overtake the PC handheld market. And given Microsoft's track record with previous devices, they might not care as long as Steam users are buying games on Windows PCs. And I seriously doubt the Windows PC gaming market is going to be in trouble any time soon.