I am more than OK to pay 500$ for a competent system. Considering that high-end phones are mostly on offer at 800$ when they launch, I think 500 is not a huge investment for a system that will last you 6-7 years, and actually have a resale value.
Comparisons with different types of products don't work.
Yes, it does, to a certain degree. The same way as smartphones started to become more versatile so did consoles, and 500$ in 2020 is not a high pricepoint IMO, for what will be the only media center that you will need for the next 6 years. Also, if sales are slow they can always cut it by 100$ a year or two later when component prices come down significantly.
The age of dirt-cheap systems is over. Even Nintendo is asking 300$ for what is essentially a tablet and 80$ for a gamepad, and people are more than willing to pay that amount (myself included).