I am of the firm opinion that the fate of the Steam Machine in the living rooms of the world will live or die based on the viability and utility of it's controller. (Check out an unboxing of a steam machine here).
After all, why use a PC rig in the living room if a console can do the same job with less hassle? Because you, hardcore PC gamer, want to play strategy games like CIV 5, MMO's like World of Warcraft, and a variety of other titles that require a PC/mouse combo to play effectively.
This controller is supposed to replicate the PC/mouse experience with just those games, hoping to allow tethered PC gamers to move their activities (when permitted by spouses of course) out of the office and into the living room.
Look to the controller!