Yes the future of Steam is in software. Selling hardware is just an avenue for them to showcase their software.
If they can grow SteamOS into a basic gaming OS, it'll be a success. It'll be free(presumably see no reason for it not to be) and provided it plays games without much hiccup, doesn't bog down overtime, can browse the Internet, and has a simple file structure UI(window users would struggle in the complexity some Linux distros can get), it would blow up in popularity.
It's really not asking for a whole lot. The bar is pretty low.