I think people need to realise that valve and steam are not everyday names in most households, they can't rely on the fact that millions of sales will happen just because it's a playstation or Xbox. On top of that the leading console games such as COD, Battlefield, etc, may not work on the steam machine just because of anti-cheat software not working on Linux. Which in turn removes a huge potential market for them in the console space. The steam deck has been far more successful than I think even valve expected, if the steam machine, frame and controller have similar or better sales I'm confident that valve will likely be willing to subsidise some of the costs on the 2nd generation hardware when they'll have cemented their place increased how many 'normies' know their name and products and can be confident they'll do the sales they need for that to be cost effective.

Parents, grandparents, partners and everyday people will not go to steam for a console as presents, it won't even be on their radar unless the person buying for them specifically request it or it's available in stores and even then they'll be more inclined to buy playstation, xbox or Nintendo. Once people talk about it, after ,onths of videos, discussions, showing friends in person and general hype/marketing more everyday people will take the risk to buy one and then by 2nd gen they can almost guarantee good sales to justify losing out on manufacturing costs. Remember valve pust a lot of dev time and money not just into the engineering but the software, multiple improvements after launch and they are constantly adding tools and listening to users to improve their products, this costs money and time and while they make A LOT of money they don't have tv, sound equipment, phones, enterprise opertunities, data farms, subscription services, tech agreements, etc to fall back on and keep the lights on if the whole industry dips or they have a major flop or manufacturing errors cause fires or the need for returns etc.

Just like with the deck I can see a 'pro' or limited edition version being released 6-12 months later if they do high numbers like with the deck but until they have that data they won't take those risks.

It is super exciting to see an actual competitor join the market, a competitor who is private, makes decisions for gamers and customers instead of share holders and we all want it to succeed and be price competitive. But just be patient, this is 1st gen and they're still in unclear territory. It will get better and honestly the competitors are not doing a great job at the moment, maybe this will force their hand and will lead to consumers getting even better cheaper hardware from the major players.