In my dreams Valve makes a stationary Steam Machine for my living room. I would buy one the second it releases, it's amazing what Valve has don't to PC gaming for me with the Deck
On one hand I feel like the Deck fulfills both purposes, same as the Switch. Just the cut-off of games a perm. docked Deck can run at 1080p/4k w/ upsampling probably isn't as current as one prefers.
But a Deck 2 would bring that much more current, and certainly bring higher resolution gaming, and so forth. Maybe not to the level of the PS5, but a lot closer than we have with the Deck now.
Still, what you're saying is pretty much business 101 IMO. I cannot fathom a Steam console that connects to your TV and is on par/better with the PS5, and provides roughly the same experience as the Deck (well it would be the same OS, etc etc) where most stuff runs great, but you can drop to the desktop to tweak if needed, etc.
Something like that IMO would be exponentially more popular than the Deck. And Valve really would only need to release a new version each console gen so their games continue to run as expected.
What's going to really sour people though is if they release it in a SFF and solder/prevent people from swapping out video cards and CPUs and ram and so forth, like a console. I'm sure many would prefer that, to a Frankenstein device where you're encouraged to buy it and then start adding/switching all the internals to make it better.
I wonder how much the removal of the screen and controller interface could cut from the costs. A refurb 64gb Deck is already quite good value for the power profile. Such a device would be a fantastic entry level PC in a market that's otherwise expensive unless you're pretty savvy about choosing components.
IMO the Deck simply cannot provide a good 4k docked experience for current gen demanding games. The AMD upsampling methods to a 70+ inch TV at 4k are really poor. Like I said if you restrain yourself to the PS360 gen you can at least run everything at 1080p60 or even 1080p90+, but once you have to drop under 1080p the Deck is terrible on big screens. And hardly anything will run 4k - even from that gen I don't see stuff running at 4k60 on the Deck 1.
This is where the Switch 2 with DLSS will run circles around the AMD hardware in the Deck 1.
Just to throw out a quick comparison, my very dated laptop can run games at 4k60 fine, most times even better - like with max options and ray tracing on Pinball Arcade it'll do 144fps at 4k, and the Deck - even with ray tracing off and at 800p the deck barely can hold 60. Turn the res up to 4k or ray tracing on and it'll drop to a 1-2 fps, very literally a slideshow.