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[Debunked] Valve Is Building a 'Steam Console' To Rival PS5 and Xbox, Rumour Claims
(insider-gaming.com)
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I explained this in my first comment above. It failed because it didn’t have any games.
Proton wasn’t a thing back then, so only games that supported Linux worked, which were basically none, especially no AAA games. So having a console with a tiny game catalogue of indie games is bound to fail.
It’s a total different situation to today. Now the vast majority of windows games is supported out of the box and without tinkering. I have a steam deck and apart from two games every game in my library works perfectly fine.
Also, Steam Machines were basically just rebranded mini PCs by different manufacturers.
With the know how and the better hardware they have today, they can make everything inhouse, streamlining optimization of their hardware and software.