Valve is trying to explain why Steam Machine costs more like a compact gaming PC than a living-room console. After confirming a $1,049 starting price for the new SteamOS box, the company says the hardware is being sold as close to cost as possible and is not being subsidized to compete with PlayStation or Xbox on sticker price.

The 512GB Steam Machine starts at $1,049, while the 2TB model costs $300 more. Bundles that include the new Steam Controller add another $79. That puts Valve's TV-friendly PC well above current console pricing, including the PS5 at $599.99, Xbox Series X at $649.99 and PS5 Pro at $899.99, according to price comparisons in The Verge's report.

Valve told The Verge that subsidizing the device would clash with the company's view of PC hardware as an open ecosystem rather than a closed console business.

"While this might seem like an easy solution, it doesn’t align with our beliefs about how healthy ecosystems are built. If there’s anything we’re religious about at Valve, it’s our belief that open systems are better in the long run, for ourselves and customers."

The company also linked the price to the same component crunch that had already delayed final launch details. Valve's Lawrence Yang said the cost of the product is "basically the cost of the components and what it takes to make it," while Pierre-Loup Griffais said Valve is being more aggressive with margins than it was with Steam Deck to keep Steam Machine close to cost.

Component costs are shaping more than the price

The pricing explanation fits the pattern Valve described earlier this year, when it said memory and storage costs were holding back Steam Machine launch plans. Valve expected parts prices to fall over time during development. Instead, memory and storage pressure made the hardware more expensive to build.

That parts crunch is also affecting supply. Griffais told The Verge that Valve is now looking at around two-thirds of the Steam Machine launch quantity it originally planned, adding that the company was not always sure it could build "any significant quantity."

The result is a device with a different sales pitch from a traditional console. Steam Machine can plug into a TV and offer a console-style SteamOS interface, but Valve is framing it as another PC option for a player's existing Steam library, not hardware sold at a loss to lock users into a closed platform. That makes the price harder to ignore, especially with reservations already open and the first order emails due June 29.