It's a smaller niche audience, but it would be for consumers who want a PC strictly for playing games on it.

I say this as someone in that niche; I maintained multiple PCs including one that had nothing but Steam and games installed on it.

I would imagine many, if not most Steam box buyers would install Windows on it for dual boot purpose like any other PC.

The i5 model should, barring any games using game engines that aren't optimized to be run on mid/lower tiered hardware. MGS5 has pretty stiff hardware requirements, as does Arkham Knight for instance. 

Of course, you're now comparing a piece of hardware that costs over 2x what a PS4 retails for, so if it doesn't handily outperform a PS4, it doesn't take any stretch of intelligence to see which is a better value. Even then, what does a reasonable person expect to be buying performance-wise for an additional $380? Me, I'd be expecting multiple 1920x1080 displays or 2560x1440 while retaining 60fps, which probably would not be the case across all games. 

It's probably not even a cost to performance issue at that point anyway; anyone who wants to spend more on a preconfigured PC is doing so because they want to game on a PC, taking things like free online play and a currently smaller library of Steam OS compatible games, with the promise of more compatibility in the future and starting with any games already purchased in their existing Steam account into consideration. They really are different niches, so the hardware value comparisons aren't as relevant as most people make them out to be. 

I'm a PC gamer and Steam machines just seem like a waste of time to me. Well for the money I feel like a console is a better value proposition anyway.

I suppose once you factor in Xbox Live/PSN, Steam sales etc it makes more sense but an entry level Steam machine at this point seems to only give a small increase in performance over a PS4, so no thanks.

Further breaking down the sybergaming specs:

That GTX 960 is strictly a 1920x1080 gaming card. The only way you're going to be seeing multi displays or 2560x1440 is on older or lighter overhead games, not games using high end game engines.

Even a GTX 970, although advertised by Nvidia as being a 4K video card, is really more of a 2560x1440 card.

The GTX 980 is where high performance evens out a bit more, but now we're talking about a $1419 preconfig box in a discussion comparing $349 consoles.

Personally, I would be configuring my own box at these prices based on an i7 Skylake and most likely a GTX 970 with a total build price of anywhere between $1,000 and $1,200. I could do one under $1,000 with some compromises, but even looking at a $1,200 build (which could be upgraded to a GTX980 with the same compromises), I would really have to like those Alienware cases to pay extra for a preconfig system.

As for the $499 build, which is what we should be comparing to consoles, that's minimum spec for high end games. If people are buying those to play high end games, they're probably going to be upset with the performance.

Those prices will come down and/or the included components will improve over time. Of course since the business model is different it will never quite reach console prices, unless you factor in cost to play online.

Yet that leaves the question who is this for.
The "I just want to play whatever is popular" crowd is still better off with a console.
The hardcore gamer is better off building their own PC.

Maybe Steam has some tricks up its sleeve. Co-operation with developers to add special settings for Steam machines to guarantee good performance. I thought that was the point of the whole excercise yet atm it seems a free for all with all the different specs.

PS1 took off because it started to give people more mature games and was an entertainment system as opposed to a toy. Not because it was different for the sake of being different. And plenty of people still prefer to purchase physical copies of games. There is absolutely no reason to buy a Steam machine for a console owner at this point.

Lol...advertising when the console prices are about to go down further is like rendering those machines' worth moot. C'mon Valve...we expect better. Ofcourse we know your machines are better for higher price.

Yeah just no.... that 450$ alien ware SteamConsole is weaker than the PS4.

Also the consoles are dropping in price, while the steam consoles will get more powerfull with time (for the same amount), the consoles will counter by just staying the same, but being cheaper and cheaper to buy.

Supposedly the controller concept is really awesome though,.. so I might buy one of those for my pc.

I love Valve but this is so not true, Steam machine only use steamOS, the manufacture are 3rd party like alienware and most of them are just expensive af!

IF YOU REALLY WANT A POWERFUL ( WITHOUT GETTING RIP-OFF ) GAMING SYSTEM, BUILT YOUR OWN PC! THERE ARE MANY TUTORIAL OUT THERE 4 YA :) !

Also, steam controller is just so weird, not ideal for gaming at all.

It's also a digital machine only, you can't use physical copy on it, not consumer friendly at all.

Oh and lack of killer exclusives. The PS4 has Bloodborne, inFAMOUS etc and etc, Xbox One has Halo, Gears, etc and etc and Wii U has Super Smash and Splatoon, etc. Almost every Valve games available on other consoles as well.

Like i said many times before, consoles are not powerful hi-tech gaming cutting edge system. They're affordable gaming consoles with some great exclusives. 

If Valve want to enter the consoles market, they need to re-desgin their controllers and put exclusives in there, like Half-Life 3 or Portal 3 in it, and most importantly, tell 3rd party manufacturers to make it more affordable cuz so far, most of the steam machine are just too overpriced for what it offer.

What mature games did Sega have? Sorry, I'm not familiar with the Saturn.