I think dead on arrival is too extreme but the niche is certainly hard to see. The "just works" crowd will buy consoles and the "max performance" crowd won't be happy with this value. The niche is something like "willing to tolerate some headaches but not so much as to build my own PC". That exists but seems small.
Feels like they should have gone cheap. Undercut the switch and be the cheapest way to play games on your TV. We're pretty far past performance equalling more entertainment. A 150-200 box to play indie side scrollers is a niche that exists.
I don't buy consoles because I have been a PC gamer for over a decaded. But you know, I'm a parent now. And I want couch gaming with my family. That's the use case for me my family. I got mu child a steam deck (I have one too). A steam deck is a terrible idea for an elementary schooler. It has to stay docked now because she's already broken parts of it.
But even docked, it's a winner for her and all her friends. She's converting more parents over via her friends. The well off ones are just buying from Valve like me. The less so, are using whatever PC is around to mixed results. I'll see how it goes as the kids get older, but I think there's a bigger case than you think and I think it's mostly years long PC gamers who want a more communal experience be it with partners, kids, or friends.