In addition to aforementioned current pricing problems, the steam machine also comes with a small form factor (which is difficult to build to work well, might need specially made parts to fit it) and a preinstalled easy to use console-like OS for gaming, presumably with support.
If you don't care for those, then sure, not the target market. I'm not planning on buying one, but if I ever want a small form factor PC, this is going to be a serious contender - even if I end up putting a different distro on it, there's real value in the form factor and presumably having hardware that'll work well on Linux.