Hardware
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Not sure why you're downvoted, but I think you're close to at least partial reason. Having one device last a few years makes it easier to replace under warranty, if what you're truly trying to do is provide superior customer service over competition (they probably have lost of spare parts, as it makes sense to order bulk and of extras, unless you're super greedy company who has no faith in its product).
And as I assume you're suggesting, they're going to make their money on the games that people buy to play on that device, so why waste effort on making miniscule improvements that may end up hurting your brand and labelling you a money grabber.
Don't get me wrong, Valve know how to make lots of money, but I bet they're smart enough to try and do it in a "sustainable" way from their perspective.
Excessive releases drive me away from a developer/manufacturer. It just underscores their priorities toward innovation and quality.
Yeah, this is also the whole point of a console from hardware and developer viewpoint - stability and standardisation. Everyone has the same device so you know of it works on the Steam Deck, it works on all of them. You also have a standard product to manufacture and the costs go down with scale.
Storage space and screen upgrades aren't so important as GPU, and CPU plus RAM. Once those change you have fragmentation int be market and basically 2 consoles.
It makes 100% for valve to not release a new device until there is a generational leap. Otherwise all they do is fragment and damage the existing steam deck ecosystem.
The exception here for gamers, is that it's an open platform in the sense it's Proton running on Linux. So you could do the same on more powerful competitor hardware if you wanted, but you'd not have support or a guarantee it'd work.
I have a mini PC plugged into my TV running linux - it's essentially just a souped up permanently docked deck. There are also plenty of hand held devices that can be flashed with Linux and bound to be more in the future.
For Valve if they just wanted to make money all they would have to do is to not make steam actively worse and just provide some tiny bugfixes and maybe try to fix some larger issues when they pop up. Everything else at this point is just a pet project for them