The price is a problem (understatement) not least because there no disc drive, not even the vertical stand included. For what is supposed to be the ultimate model you're already onto a loser, missing significant features.
Presumably they are marketing this heavily at existing PS5 owners, ones who have spare cash and therefore probably bought the disc version of PS5 in the first place. You're looking at $780 total with the separate drive to feature match your older PS5 model.
There are crazy numbers for a game console not seen since stuff like the 3DO, the Saturn and of course notoriously: PS3.
One might wonder if Sony are sliding towards that kind of arrogance again if they believe they can make this sell at this price. If there's a time to beef up your gaming PC or invest in a new one then it's now.
Honestly, I can see three reasons why they're going for this price, and it makes sense from a pure business perspective.
1. This is appealing to the gamer who isn't keen on a PC build, but is expecting their console purchase to last 5+ years and may still be on a PS5/Xbox One or even a Series S.
2. This is appealing to the PS5 gamer who is willing to sell/trade-in their PS5 for around $300-$350, thus making the PS5 Pro a $400 purchase.
3. This is appealing to people who don't want a repeat of CP2077 on PS4/Xbox One, and want the best platform possible for GTA6 next year, especially since it won't be released on PC until 2026 at the earliest.
PC Gamers are going to balk, Xbox gamers are going to balk, and people who simply don't have the money are going to balk, but Sony isn't going after those people anyways. This is a higher-margin product for a subset of the total market (I'd estimate 10-15%) and unlike the PS4 Pro and One X, isn't necessarily designed to supplant the PS5 Slim as the volume seller.
Frankly, I think #2 is rather significant. It's easier than ever to get a decent price for your current system, and PS5 Slims have been holding their value rather strongly. For example, I purchased one earlier this year to play GT7 (I'm a PC gamer but a major yet lapsed fan of the Gran Turismo series) at MSRP. Did everything I wanted to do in GT7, and sold it on eBay for roughly 75% of what I originally paid. In essence, I rented the PS5 for roughly $30 a month for the 2.5 months I had it. For some people who have had their PS5 for years, being able to get 50-75 cents on the dollar and make the PS5 Pro purchase a $400 buy is a hell of a deal, especially since (going back to point #1) many of those people aren't going to do a PC build anytime soon.
Is it for me? Sure, if only because I have no reason to get an Xbox (I have a PC build), but I also won't wait 1+ years for a GTA6 PC release. Also, $700 isn't a budget stretch, but for others it is. However, those people still have the perfectly capable PS5 Slim to purchase.