This will be interesting. I'm upgrading my work phone to an iPhone 7. I will compare heads up these two phones, and maybe the Nexus apologists can stop this year of making excuses because now we we have a $650 phone that's being marketed as a premium device.
IMO it's because flagship devices have pushed on a lot further. A few years ago yeah all you had to do was have spectacular hardware like a computer and be done. But now new features like waterproofing, wireless charging are becoming standard. Apple's really pushed on the camera with their new fake bokeh, dual lens, and live photos.
What can Google do in 1 year to phones (5x and 6P) that were really just basic vanilla Android phones? What killer feature are you going to add? Samsung took years of refining TouchWiz to give it the right balance of features versus spam. After all it's pretty well acknowledged Google doesn't pack Android full of features and its up to OEMs to add in additional features.
I personally think they should've stuck with 5x/6p pricing, as it takes some time to cement yourself as the new flagship in town. Why would your average consumer shell out $650 when they can get an iPhone or Galaxy S7 which are household names and have more features? This isn't a wide open market like 2010 when Android was still young. This is a mature market and if anything the new competitors are coming in with lower prices (Moto, OnePlus, Chinese brands, etc.).