Probably the biggest advantage they have is that they can sell devices at cost or even at a loss and still profit from increased Steam game sales, like how other console makers operate.
3rd parties can’t compete with that. Not even close. If there’s no profit from the device itself, there’s no motivation to make it. And apart from the hardware cost, they also need to pay for the R&D and corporate maintenance. They can’t compete with the Steam Deck. If they made an exact Steam Deck clone, they’d have to make it, idk ~$40 more to make a profit, but no one would buy it because the Steam Deck is the same for less. They have to give it slightly higher specs to give it a niche. That might take hardware cost up to $500 and then charge $150 more to make up for the distributor fees and then $100 to make it actually profitable. But at that point, they’ve already lost most budget and casual gamers, they might as well aim at whales and enthusiasts and make profits $300. If a $950 device sells half as well as a $750 device, it’s still more profitable.
The Steam Deck is not sold at a loss. The initial pricing for the 64 GB unit was barely profitable, but this quickly changed with production ramping up.
This was confirmed by Valve themselves in an interview that happened months after Gabe’s famous comments about the pricing.
So yes, Valve profits from the games too, but that’s not used to subsidize the Steam Deck’s price.
Two things massively help Valve:
Steam is a goddamned money printing machine, they are the most profitable software company per capita, per employee… possibly bar none.
Also… they’re not publically traded.
They do not have investors constantly forcing maximization of short term profits at the cost of literally everything else.
… So they can afford to … not price gauge everyone.
Probably the biggest advantage they have is that they can sell devices at cost or even at a loss and still profit from increased Steam game sales, like how other console makers operate.
3rd parties can’t compete with that. Not even close. If there’s no profit from the device itself, there’s no motivation to make it. And apart from the hardware cost, they also need to pay for the R&D and corporate maintenance. They can’t compete with the Steam Deck. If they made an exact Steam Deck clone, they’d have to make it, idk ~$40 more to make a profit, but no one would buy it because the Steam Deck is the same for less. They have to give it slightly higher specs to give it a niche. That might take hardware cost up to $500 and then charge $150 more to make up for the distributor fees and then $100 to make it actually profitable. But at that point, they’ve already lost most budget and casual gamers, they might as well aim at whales and enthusiasts and make profits $300. If a $950 device sells half as well as a $750 device, it’s still more profitable.
Edit: more realistic numbers
The Steam Deck is not sold at a loss. The initial pricing for the 64 GB unit was barely profitable, but this quickly changed with production ramping up.
This was confirmed by Valve themselves in an interview that happened months after Gabe’s famous comments about the pricing.
So yes, Valve profits from the games too, but that’s not used to subsidize the Steam Deck’s price.