The 1tb nvme spec is only for direct storage, not windows 11.
Surface devices aren't for gaming and never have been. This won't have an impact on those devices. Those massively 'overpriced' laptops are for design/form factor choices.
When you say hardware OEMs? Which ones and which product ranges? Also the series s is still 100 usd cheaper and going to be a lot more available than the steam deck
Pretty much all of them that sell their devices based on high-end smartphone pricing with lower tiers for Windows S and standard Windows.
The CPU makes any of the Arm and Celeron offerings in a mobile look misplaced at anything more than $200 IMHO, and even is a disruptive choice to Apple and Nvidia's strategies of ditching dependence for costly brawny x64 CPUs and pushing for ARM APUs as the future.
The XsS in effective IQ terms is in a much worse spot because it isn't targeting a 7" portable screen, and in reality is targeting 32" and higher - which was the originally TV company justification for HD ready and Full HD resolutions. The $100 premium for a portable device is probably smaller than normal, and mainly because both are pitching next-gen gaming with the same downgraded IQ strategy are they in direct competition, because in time both will be readily available to all gamers, in time.
Surface devices, are most definitely used by lots of gamers - it is a PC after all, and versatility is demand by the market. Microsoft's push to sell gaming on PC, includes all those Windows devices IMHO, so the Steamdeck is a high spec and low price, they all will get compared to, now.