When buying a gaming console, I imagine folks think more about the upfront cost ($600 for PS5 vs $1,050 for steam machine) as opposed to the total cost of ownership.
The steam machine may be cheaper in the long run once you consider:
* Playing PlayStation games online costs $11/month.
* PlayStation games tend to be more expensive than steam games.
Steam isn't the Steam machine. If somebody's on a budget a PC you could get for a couple hundred is way more than enough to run nearly all games on Steam; $600 could get you a beast of a machine. I don't really know who the market for the Steam Machine is, because that price is kind of insane. I suppose we'll see how things look in a year or two there.