It would be a flop for a traditional console, but the Steam Deck isn't a console, it's a PC. The reason that consoles need massive sales is because consoles have a limited repertoire of games (at best, they might be backwards-compatible with the previous-generation console), so they need large sales to demonstrate an install base and convince developers to make games for the platform. But if you're compatible with PC software, you don't care about that. Valve doesn't need to entice anyone to make PC games; the install base for the Steam Deck is the entire PC market. And with the help of emulators, a PC has access to multiple orders of magnitude more games than any existing console.

So the metric for success for the Steam Deck isn't to compare it to a console, rather it's to compare it to other specific PC form factors (e.g. a specific model of laptop).