A bigger screen, smaller and lighter form factor, long battery life, and a built-in profit, and still only that much of a premium? Actually, that's pretty good.
Plus it's a bunch more capable.
Let's do some "cost math". The cellular model is about $460. If you amortize that over a 1 year product release cycle, the monthly cost is $38.33. Not bad for the functionality. If you presume you sell the device each product release cycle and use one of those buy back services, which is the most frictionless not the best possible price means, they will pay around $300 for it, leaving you a net $160 for the newest model. That's only $13.33/mo. The cellular activation is $10 a month either way if you already have a smart phone too, and wifi is free. That is a very low Total Cost of Ownership (TCO).