Technology

I've also read speculation that selling it at a loss could contribute to antitrust lawsuits against them. Basically if they sell gaming PCs below cost, and the gaming PCs incentivize Steam use over other platforms, there would be an argument that Valve was using their 30% sales cut to sell hardware others can't compete against, to further cement their monopoly. This would be partially countered by the open nature of the device, but not fully since it would still "steer" common users towards steam over other platforms.

This isn't an issue for console makers because there are multiple competing consoles with valid market share.

I commented here quite some back that I did not expect that Valve would subsidize the console and that it would be for this reason, that subsidizing the console means a razor-and-blades business model, and a razor-and-blades model requires a closed system, where one has to purchase additional product specifically from the vendor of the initial product. They were making an open system, where this isn't the case.

https://en.wikipedia.org/wiki/Razor-and-blades_model

The razor-and-blades business model[1] is a business model in which one article is sold at a low price or even given away in order to increase sales of a complementary good, such as consumable supplies. It is different from loss leader marketing and product sample marketing, which do not depend on complementary products or services. Common examples of the razor-and-blades model include inkjet printers whose ink cartridges are significantly marked up in price, coffee machines that use single-use coffee pods, electric toothbrushes, and video game consoles, which require additional purchases of accessories and software not included in the original package.[1]

Although the concept and the catchphrase "Give 'em the razor; sell 'em the blades" are widely credited to King Camp Gillette, the inventor of the double-edged safety razor, Gillette did not in fact follow this model, nor did it invent the razor-and-blades model, although it did pioneer the production and sale of disposable razor blades.[1][2]

In more recent times, video game consoles have often been sold at a loss while software and accessory sales are highly profitable to the console manufacturer. For this reason, console manufacturers aggressively pursue legal action against carriers of modchips and jailbreaks due to a belief that the resulting possibility of unauthorized or prohibited copying causes a loss in profits. Particularly in the sixth generation era and beyond, Sony and Microsoft, with their PlayStation 2 and Xbox, had high manufacturing costs. As such, the companies sold their consoles at a loss and aimed to make a profit from game sales.[9][10] Nintendo had a different strategy with its GameCube, which was considerably less expensive to produce than its rivals, so it retailed at break-even or higher prices.[11] In the following generation of consoles, both Sony and Microsoft have continued to sell their consoles, the PlayStation 3 and Xbox 360 respectively, at a loss, with the practice continuing with the concurrent eighth and ninth generations of console hardware.[12][13][14]

Duh - people are shitty and would abuse it.

Valve already stated from the beginning that they didn't want to subsidize the cost like a console but they also believe that idea is infeasible which isn't true, especially in the short term.

The whole point of the hardware is to push steam software and increase the Linux marketshare which would encourage other OEMs to offer SteamOS or Linux from factory. No one is buying this to not use it for gaming under a subsidized price because there are much better options for that purpose.

The primary buyer would still be a steam user, meaning they'd make that money back on steam purchases. They could even run a launch promo to offer reduced price with a steam wallet combo. At least give it a month or two before the final price sets in stone.

Even if they had launched at the original $750 earlier this summer with a fat price increase warning, I think the average user would have been more receptive to buying at the full price in the future. It's the getting slapped with a $1k pricetag from the start that's got everyone shell shocked.

Do they at least have a clause in the TOS to not use the Steam Machine to build or use nuclear weapons?

(iTunes had one and that shit will never stop being funny)

They could give you steam credits with the purchase essentially the same outcome