To those saying the Steam Box will have trouble finding a pricepoint below 500 dollars, I want you to remember that we as PC Gamerse have MUCH higher standards for graphics than console gamers (most of us don't even know medium preset exists).
This review from TomsHardware though shows us the type of stuff you can do with $400.
http://www.tomshardware.com/reviews/mini-itx-do-it-yourself-game-console,3531-15.html
You get what you pay for oibviously so I think a person who is interested in a $400 steambox and has that kind of budget for gaming will be VERY happy. Especially since the steam box is scheduled for a next year release so there will be better graphics cards options than a 7790. It's possible though!
7750.
But overall, those specs for $400 are worse than a PS4 for $400, and it will perform worse than a PS4, since the hardware is pretty much directly comparable.
The only difference is that it's a higher clocked dual core CPU rather than low clocked octa-core CPU, which might mean there are a few edge case CPU limitations on the PS4, but the PS4 has more RAM, faster RAM, better CPU overall, faster GPU, an optical drive (so that you don't need a DVD player/etc hooked up to your TV).
Yes, it doesn't have the freedom of a PC, but the problem is that the PC there has a very limited shelf life. 1GB GPU RAM for 1080p gaming, dual core CPU, etc.
While they may work just about OK for now, it's not really very future proof, even at a basic level, given that we're about to get a whole generation of new games which push graphical requirements due to two new consoles being released.
The R7 260X is most likely to be a suitable entry level graphics card for such systems, which has currently unknown specs, but should be $140, meaning that you could build a dual core 4GB RAM system with sufficient graphics card for $425 or so, but you will have CPU and potentially RAM issues going forwards, and you won't ever be able to go for highest settings on new high end games.
If you scrap the "retail" requirements and assume that OEMs can do some real stuff to get prices down, and have minimal margins, you might manage something which works in the shorter term though. That THG system is not particularly good for suggesting what you can actually get for $400.
B85 motherboard (cheapest on Newegg): $65
Cheapest quad-core Intel CPU: $190 / $70 dual core
8GB RAM: $55 / 4GB $30
AMD HD7850 2GB: $135
500GB HDD : $55
Case and PSU: $20 (generic price for something just good enough at knockdown/mass production price)
Total: $375 for HD7850, dual core CPU, 4GB RAM, 500GB HDD
$520 for HD7850, quad core, 8GB RAM, 500GB HDD
AMD, $85 for a decent enough quad core CPU, $48 for motherboard, total price of $373.
Knock off 10% to be nice for non-retail pricing and it's $335 barebones with lower than console specs.
$442 for an mATX system that could game acceptably.
http://dl.dropboxusercontent.com/u/1061446/matxgaming.png
3.8GHz Trinity quad core, HD7850 2GB, 4GB RAM, 500GB HDD.
Three free games (Ghost Recon and two AMD Silver level games).