The way I view Steam Machines is just as a delivery system for SteamOS. I don't know if Valve even thinks Steam Machines will themselves be successful. I'm thinking they are betting on enough users adopting Steam Machines that they will get a foothold with their OS and start pushing Microsoft out.

And that kinda makes sense as Microsoft is going the "AI first" route and focusing on productivity. That leaves an opening (if albeit a small one currently) for companies like Valve to pull users into their "Gamers first" SteamOS.