I'm someone who has built dozens of gaming PCs, and wired my house. I also have zero interest in doing the above... if I have to pay few hundred extra to get a Steam machine hooked up to a TV without all that hassle... I'll do that.
It's not the absolute best value for gaming. It's not horrible in current market conditions but it's also not targeting "best value for gaming" anywhere in the marketing materials. It's hardware that can play your Steam library on your TV. There are harder, less expensive ways to do that, as there have been for ages.
If you're a console gamer, there are less expensive, just as easy options to play console games, so it's definitely not suited for that market.
It's really only catering to people with disposable income that want a cute way to hook up a Steam-capable machine to a TV. It's not a huge market, nor is it a non-existent market.
It was probably a bigger market at $750 than $1050, but we can't have nice things.