The Steam Machine is a victim of RAM prices exploding. It's price is fair considering the price of its parts but also causes it to be in a price segment where I am not sure who it is for.
People that can afford a Steam Machine at the current price point are likely to already have stronger hardware.
A Mac Mini a similarly sized with like half the price with dramatically better CPU. Or if you could get a PS5 pro, still for cheaper with vastly superior gaming performance.
Valve could have started with a premium model for the hardcore fans that are less price sensitive and released a budget version later when maybe the RAM apocalypse has ebbed.
Still hope it sells, the form factor is amazing.