So what advantage is there to i7? If the equivalent xeons are the same price and have advantages but no disadvantages, why would anyone use i7 instead of xeon?
it is really about selling to a different group of folks. Core i7 49xx folks want "k" models which support overclocking. It is more about control than than steady, long term, reliable ( 24/7 uptime) performance.
Overclockers tend to move on to the next "shiny" object in year or two anyway. It is an entirely different group of folks those who want stuff that just works no problems no matter what the workload is.
Often also Intel will drop VT-d Vt-x on these overclock skewed 'k' products. Anything like VMWare /Parallels/etc will run substantially slower ( if at all if using newest features ).
In simple terms if a tweaker and primarily looking for a machine to "trick out" with a higher than 4 core count then would pick a Core i7 x9xx k model. More likely if primarily interested in just maximal overclocking then would drop down to the mainstream desktop/laptop oriented implementations as they move to new process tech faster than the higher core count stuff does.
Does Apple jump out of bed each morning eager to get deeper penetration into the tweaker market? Frack no. It makes about zero sense from a "I sell easy to use, it just works" tools and systems" perspective.
Plus if xeon and related components are no more expensive, that means that not only is the base MP ridiculously overpriced, it's ridiculously overpriced for no real reason.
There have been larger marginal differences in ECC versus non ECC RAM in the past. Alot of the hype about mainstream desktop versus workstation/server implementations was more true 3-5 years ago. Now not so much.
There is also core infrastructure in the rest of the system that leads to overall systems increase. Always amusing about how the Mac Pro case can't cost more than $100 because this superficially similar one costs $100.
The core infrastructure for the top end Mac Pro is the same exact one used for the entry level one. If go to HP/Dell/Lenovo their chopped down Core i7 has chopped down components to. That often promotes the Apple's to Oranges comparisons.
However, it is "overpriced" beyond that for a reason. Continuity with the upper end and with the iMac boundary. I suspect someone was also using the juiced profit margins to put up a misdirection argument about why the unit volume numbers didn't meet growth targets ( growth sucks but look at this money. Which doesn't really mean jack squat when money is flowing into the company stockpile like a flash flood from elsewhere. )