It's a platform war, so the point is market share. Also, the top model of the iPhone is already pushing $1,000.
Suppose you need a 64GB or 128GB phone for your job, but you aren't some rich asshole? You should spin in the wind?
Remember these things are going to be upgraded yearly or every two years at most.
If you want ubiquity and to "win" the platform war, at some point you have to go for market share. This is that.
I thought Apple didn't care about market share? And when exactly does one 'win' the platform war? There is no endgame, and there isn't any 'winning', because if someone does win we as consumers lose.