The main problem I see is that if this is any cheaper than it's hardware, people will buy 100s of them and stack them in server racks for CI runners or whatever. Generating only losses for Valve and making the hardware unavailable to gamers.
It needs to either be at market rate or locked down to only be useful for gaming.
I don't think they could possibly make it cheap enough for that - especially once you consider all the money being wasted on RGB/Bluetooth/a GPU you won't use.
Messing around with weird consumer hardware in a datacenter context isn't exactly attractive. If all you need is some x86 cores, an off-the-shelf blade server approach gets you far more compute in the same space with far less hassle. Even if the purchase cost is attractive, TCO won't be.
There are already small PCs without a GPU for around $200–300, and this will cost at least 2-3 times that. Valve already comfirmed, that the pricing will not be 'console like' and would match entry level PC. And PS5 is $500.
The PS3 was weird. It had a unique architecture that made it especially useful for HPC in an era before GPUs were useful for that purpose. The CPU and GPU in the Steam Machine are not particularly high-end.
Does it have IPMI? Does it have ECC ram? Racking Mac Minis is a painful enough, this form factor is less rackable than that. If you need to physically adjust the form factor per device, whatever you could've saved will be immediately lost in labor.
The PS3 was uniquely powerful, compared to its x86 peers. It wasn't just cheap - it provided the compute of 30 desktop computers in the space, power, and price envelope of one.
I think the limitation on server gear these days is electricity price vs compute, with the hardware price being an up front investment but not dominating the lifetime cost. At least at this end of the price range - it's a consumer GPU, not an A100 or anything.
Iiuc, unlike Sony’s PS3 (which were bought and used like this), Steam is the unique distributor so it would be easy for them to not allow (or make really difficult to) buying thousands of machines.
(Or they could sell it everywhere for higher price but the Machine would come with a non transferable Steam gift card.)
It needs to either be at market rate or locked down to only be useful for gaming.