Valve has revealed the Steam Machine, at £879 for the 512GB version and £1149 for the 2TB version.

It's a lot more expensive than people were expecting and almost certainly more expensive than Valve had intended when they originally announced it. Unfortunately, this is the reality of the sudden hike in memory and storage costs, thanks to OpenAI contracting the next few years' supply with money they don't have (and have no convincing plan to obtain). This also has knock on effects to pretty much every business and consumer in the world now, who will delay upgrading outdated hardware and suffer productivity losses as a result. A better government would have prosecuted OpenAI for this, but they didn't, so we are here, with very expensive components.

It's difficult to comment much on the exact price to performance ratio of the Steam Machine, because the CPU and GPU are both semi custom components that haven't been widely benchmarked yet, but I suspect that a comparably priced custom built tower PC will comfortably outperform the Steam Machine. The reason for this is that the Steam Machine is a small form factor PC, more comparable to a laptop than a tower desktop, so there's always going to be additional challenges in packing performance into a small area and managing heat, which drives up costs.

People are comparing it on price and performance to consoles, but this isn't a fair or realistic comparison. Consoles are inherently locked down and console manufacturers can subsidise the hardware costs because the console has no use outside of gaming, which allows the manufacturer to recoup their costs by overpricing the games.

The Steam Machine is a general purpose PC and if Valve subsidises the hardware by selling at below market value for the components they'll find that businesses buy them up and use them as general purpose PCs, meaning that Valve is essentially subsidising unrelated businesses. Sony ended up becoming victim to this all the way back in 2002 when they allowed Linux to run on the PlayStation 2. There are ways Valve could have mitigated this, such as limiting purchases to Steam accounts over a certain age, but there are downsides to that too. I don't blame them for not doing this. Or they could have bundled with a big chunk of Steam store credit, making it no less expensive for the hardware but slightly better value for gamers. I think they should probably be doing this.

I think the Steam Machine will be the least successful of Valve's modern hardware offerings (i.e. the Steam Machine, Controller and Frame) because there isn't a good market fit for it. The vast majority of Valve's customers already own gaming PCs and don't have much need for a mid range small form factor PC, especially at current market prices.

The main target is going to be people who want to get into PC gaming but don't own capable hardware and just want a plug and play solution, and remain specifically interested in PCs over consoles even after they see the hardware price (though, of course, the games are much cheaper and more diverse), and are happy to exclude themselves from AAA level games, which demand more powerful hardware. There are a lot of filters in that.