I don't know what you mean by 'killed.' It'd be sold out faster than hot cakes.
No way. $1100+ to play games with medium/high settings at 1080p? You can probably buy a prebuilt tower that does better than that at that price.
If you make 5 of a product and put a bunch of marketing behind it you can sell out too. People are going to use "selling out" as some sort of barometer of success but its like the lizard-man veto in politics. You'll always find some small percentage of people who will vote for the motion "the nation's leaders are a group of lizard people", but you can't use that as any sort of signal regarding the validity of the claim of the motion.
Valve could have priced this at 5k and probably found a couple thousand buyers, and if they only made a few thousand boxes they could claim it sold out then too. This thing is DOA in terms of having any major success or impact on the gaming market when I can walk down to my neighborhood PC store and either build a better PC myself for less money (at off the shelf markups no less!!!) or get a pre-built with better specs that costs less. I could buy a P5Pro and a Switch 2 combined for less money than the 2TB version, and the PS5Pro has 2tb as well!
Its actually mind boggling that Valve is coming in with a less economic product that a fucking hand-built premade at my local PC store.
It also killed their ability to make lots of units. They say so themselves. Selling out isn't a good thing.
It's objectively a terrible deal. It has console specs for double the price of a console.
In fact you could literally just buy a separate PS5 and Macbook Neo and spend less than most Steam Machine configurations, so even the "it's also a computer" selling point is not that big of a deal.