Normally that only works if you have DRM that locks the games to your platform, so that people don't get the hardware at a discount then use it to run someone else's software.

But, in Valve's case, it really has no competitors in the PC gaming space. That might not last forever, but it almost certainly will last as long as this PC / console is around.

They said they wanted to sell it at PC prices not console prices. Probably because this thing is literally a PC that can be used without ever downloading a single game. If it were too cheap companies could buy it as cheap office PCs.