If those same hard core gamers are so concerned with power why don't they just go with a PC. Hell, hardware is cheap enough that you could make a $500-600 computer and get the superior experience. I never understood that about the people who ragged on the Wii U's lack of power.
I would also mention that steam machines are also in Sony and Microsoft's rear view mirror. It's not an immediate threat, but eventually more games will be compatible, the operating system will be improved, and with the right price cuts, they will begin to increasingly siphon off sales long term from both Microsoft and Sony. The console market is going to be very crowded.
A lot of hardcore gamers, wont buy a PC.
1- you need a more expensive PC if you really want to see big differences in graphics.
2- Most parents that dont know anything about PC just go to the mall or supermarket and buy a console.
3- Consoles are more user friendly. you just sit on the couch or bed and press a button to play. On a PC you have to enter to windows, enter to steam, check drivers, put big picture, and then play, not so friendly in the living room.
4- You have to find someone that build a pc for you, else its very expensive.
a console is like apple iphones, very easy to use, not much to set up, almost like buying a tv.
And I dont get the point on buying a steam machine. I think its just better to buy a cheap pc to do streaming and that can play a lot more native games.
A console gamer will buy a Sony, Microsoft or Nintendo Console, wont buy steam machines.
Now, on the power.
IF Wii U had the same power of the PS4, then a lot of third party will develop for it.
Also nintendo would be able to make bigger games and with better graphics diferentiating itself from mobile gaming.
Nintendo had once the most powerfull machine of its time, the Nintendo 64, but now they want to earn money selling shit hardware. It was great with the wii because there were no mobile gamers, they introduced the wii mote and they were selling Wii at 250 USS instead of 500. Now its another ballgame. And if nintendo makes cheap hardware that compares to mobile, they will fail horrible. They are more concern about making stupid amiibos that had almost nothing to do with the hardware to play the games or the great games they used to make like ocarina of time. Its almost like making dolls for fanboys instead of making great platform and games.
It it was a company like Madcatz, I would agree with you, but this is Valve, and with Valve, comes it's massive catalog of games, steam sales, free online, mod support, and every other benefit that Steam customers enjoy.
The steam machines immediately will not be successful market sharewise ,but will be successful hardware wise. This means that it's manufacturers combined will probably set out to sell a few million over however long and they will get it, but Microsoft and Sony will not have to worry about it immediately, but over time they will as Valve continues to make improvements and learn from their mistakes. I imagine something like not necessarily death from a thousand cuts, but serious injury from a thousand cuts over a long period of time. In year 1 or year 2, steam machines will not be a problem, but it's 3rd year they'll have to address it and to keep customers from moving over to pc ,which by the way is happening right now. That's what I think is going to happen.
As for some of your other points, building and running a pc is pretty easy and most games you can play from the couch. Most things are actually automatic anymore. Again, it really is not that expensive to have your game look better compared to the consoles. I'm saying this from personal experience.
As for Nintendo's power, I think the lack of third party support has as much to do with bad wii u sales and 3rd party games selling poorly as it does with the power. Power was a factor, but bad sales didn't help. Even before the current gen consoles were out, 3rd party support wasn't that great and even the games themselves weren't selling that well. If anything, Nintendo has a brand problem in that your average customer just thinks kiddie games when they think Nintendo. They need to rebrand themselves somehow in a way that they don't lose that family friendly image but at the same time be able to cobble together enough so called "hard core" gamers to make their consoles more viable.