To be fair, Valve didn't put a ton of resources toward Steam machines, they kind of expected other companies to take the risk for them.

But the real problem is that people will expect much better performance from a Steam machine vs a Switch because PC gaming is often more focused on performance and Nintendo demographics instead expect a unique gaming experience. So the Switch can get away with simpler games at a lower resolution, but I really don't think Steam can.

Anything Steam releases would need to at least match XBox and PS5 in terms of performance, and probably beat it to be compelling (otherwise why not just buy an XBox/PS5?). The reason the Deck works is because it offers a new way to play games that just don't exist elsewhere, so the competition is a lot lower than a set-top box would be. They have way better hardware than Nintendo, they can be cheaper than handheld PC products because they can expect a cut of digital sales, and they have the talent to tune such a device (they are a game studio, after all).