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According to a conversation that IGN had with Valve Engineers Pierre-Loup Griffais and Yazan Aldehayyat, it seems like the Steam Machine was originally intended to be sold for much less than what has just been revealed. When asked by IGN if the recent computer components market had affected the pricing of the Steam Machine, they replied that the effect was similar to what had just happened with the Steam Deck's pricing in recent weeks.

To put that into actual monetary terms, with the Steam Deck increasing from $549 to $789, using that same percentage difference, it seems likely that the Steam Deck was originally hoped to be sold for around $749-799 rather than the $1049 we're having to contend with now.
That makes the device a tough sell against the $600 PS5, which delivers similar performance, and the $900 PS5 Pro, which should comfortably beat the Steam Machine in gaming performance.
It also could foreshadow what future "consoles" are expected to sell for. We're entering an era where new technology is increasing in price at an alarming rate. What do you think? Does the Steam Machine still represent good value for money?
Source: IGN
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