"Large console makers like Sony and Microsoft "can commit to tens of millions of orders, and have strong negotiating power," Niko Partners analyst Daniel Ahmad pointed out. The Steam Machine, on the other hand, is "a niche product that cannot benefit in the same way when it comes to procurement," meaning Valve has to shoulder higher component cost increases."
""It's not clear when or if Valve locked in supply contracts for the Steam Machine, or if supply can be diverted from the Steam Deck for the new product," Tech Insights analyst James Sanders noted. On the other hand, "Sony and Microsoft likely will have locked in more favorable component pricing before the current spike," Van Dreunen said."
Increasing component costs are affecting gaming hardware manufacturers unevenly. Large console makers can commit to tens of millions of orders and secure stronger negotiating power for components. Valve's Steam Machine is a niche product with weaker procurement leverage, forcing Valve to shoulder higher component cost increases. The timing of Valve's supply contracts for the Steam Machine remains unclear, and supply might be diverted from the Steam Deck. Sony and Microsoft likely locked in more favorable pricing before the current spike. The Steam Machine's smaller size can reduce packaging and shipping costs, and direct web sales eliminate retailer markups. Component issues appear to be long-term.
Read at Ars Technica
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