The Steam Controller is going to change. According to two game developers tweeting from Valve's Steam Dev Days developer summit, Valve has decided to remove the controller's central touchscreen. While it sounds like the gamepad's twin trackpads will remain intact, the touchscreen was deemed redundant and possibly even distracting from games, as Valve wants players looking at the television instead of their hands. That doesn't mean there won't be customizable controls in the center of the gamepad, though. Players will simply use a feature that Valve's calling "ghost mode."
We saw an early demo of "ghost mode" at Valve's headquarters a few months ago, and it's fairly simple: when you move your thumb on the Steam Controller's touchpad, you can see a ghostly image of your thumb on your TV screen as well, and you can press virtual buttons placed there.
In addition to removing the touchpad, attendees are tweeting that Valve will be moving the existing ABXY buttons on the controller into a diamond shape to offer better backwards compatibility with other game controllers, likely the Xbox 360 gamepad which many PC game titles have adopted in recent years. It may add a directional pad as well. Presumably, the new controller will place a third touchpad near that diamond for ghost mode functionality. The controller will reportedly take standard AA batteries.
Steam Machines should support up to 16 controllers at a time with the new Steam Controller API, according to tweets from numerous attendees.