Why a bump to $700 could be a “death sentence” for the Steam Machine

In a striking revelation, Valve has acknowledged the increasing costs of essential components like RAM and storage, prompting a reassessment of the pricing and shipping schedule for its anticipated Steam Machine. This announcement has stirred significant speculation among analysts regarding the potential price points that consumers can expect. Industry experts are divided on how much of these rising costs Valve will transfer to buyers. David Cole from DFC Intelligence pointed out that the situation concerning component costs has worsened significantly. He noted, "We knew the component issue was bad, but it has just gotten worse." Michael Pachter of Wedbush Morgan believes that, despite these challenges, Valve would likely aim to price the 512GB version around $599. However, he warned that a price increase beyond this threshold could spell disaster for sales, stating, "I think $700 is a death sentence and $1,000 is unsellable." On the other hand, some analysts are beginning to see Pachter's worst-case scenario as increasingly realistic. Cole indicated that prices for the Steam Machine could be nearing $1,000, with the 512GB model potentially priced just below the 2TB variant. Meanwhile, F-Squared analyst Michael Futter projected a larger disparity, suggesting the 512GB model might exceed $1,000, while the 2TB model could land between $1,300 and $1,500.