I don't disagree that this device is very likely too expensive to sell well.

But! The price is not insulting. You can built a slightly faster PC for a little less, but that PC would be ~10 times larger, it would be louder, it would lack features like HDMI-CEC and good wifi/bluetooth. It really wouldn't compare for living room usage.

In order to get anywhere near the size of the Steam Machine, you'd have to exceed its costs.

Isn't CEC available for all in-tree GPU drivers using DP-to-HDMI passthrough? (although I do imagine Nvidia would still be preferred for a custom build, perhaps with a USB CEC injector)