Google is doing an Apple, and pricing their phones at a level that they think the market can bear. As for whether the market can or not, I'm not sure.
I was very tempted to switch from a Note 2 to an iPhone 7 Plus, but the 128 GB version is over $800, so I waited to see what the Pixel prices would look like. It turns out that they're much of a muchness.
This year, I think that iPhone is definitely offering better hardware, but Google trumps Apple on some of the software. Google's AI, for example, is leagues ahead of Apple's, and it's clear to see in the difference between Google's new assistant and Apple's Siri. The question in my mind is whether I am willing to jump ship to iOS, with all of it's quirks. I'm fairly sure that the answer is yes.