If someone wanted a plug and play gaming machine they would buy a console. Essentially what you are saying is, will people buy a console that costs twice as much as its competitor when all it offers are better graphics. The answer is no for the vast majority of console gamers.
This doesn't have to appeal to the vast majority of console gamers. Just enough of them to make money.
If that was the case, Sony (or Microsoft) could have slapped in a faster CPU/GPU and raised the price to $800-900. Obviously they are trying to keep the price down and are shooting for the $400-500 mark. Why? Because if they charge $900, people will go for the $400-500 option. If they wanted high end graphics they would spring for an expensive PC.
It's a different model that may be too confusing for the mass console market. What they are doing here is carving out a portion if that market. It's not about appealing to the entire pc market or entirely to the console market. It's about creating a value proposition that appeals to a subset of those markets. I don't get why this is so hard for people to understand. Consoles and pcs have pluses and minuses and you make your purchase decision based on them. This will have its own set of pluses and minuses that blends the two. Price isn't the only reason people choose a console over a pc, graphics isn't the only reason people choose a pc over a console.