It's the same reason why Apple can charge $800 for a phone they have made in China for about $50 max. People will pay it. And until people stop paying ten times what the infotainment systems are worth, the car and bike folks will keep right on sticking it to them. It's called pricing to whatever level the rubes will put up with. Their cost to actually produce or procure the system and install it has nothing to do with it. The profit margin on the accessories is much higher than the profit margin on the basic car or bike.
IMHO, built in NAV systems are something to be avoided, not embraced. I can buy a good portable Garmin for less than $200, and if it fails I'm out $200. Wait until that built in NAV in your car or bike fails and see what it will cost you to replace it. And many do in fact fail over time.
Jerry

You hit a nerve, Jerry! You're absolutely correct in what you said, as you nearly always are.
BUT, it isn't about the price/cost of the actual device at ALL... It's about the value that can be delivered THROUGH the device. The iPhone gives the user access to a VAST ecosystem of apps to do more things than you can ever imagine... Maps, weather, traffic, you name it... and all delivered via the network seamlessly, in real-time, and always current as of right NOW! Ditto the Android devices.
I have over 100 apps on my iPhone, and that's under the average. Some of them do things I would never have imagined I would need or want to do before I saw the app. Now, they're indispensable to me, because of the value they deliver to me... value that actually simplifies my life.
These devices are not "smart phones". They are really highly-programmable and customizable handheld computers that also happen to be able to make phone calls - and can also make phone calls over Wi-Fi through various apps, without even needing a carrier.
In sharp contrast, the built-in Infotainment systems offer none of these downloadable apps... Because they are closed systems, and very few people even have access to them. You're stuck with whatever the people who design these overpriced monstrosities decided to build in... which all-too-often is just low-function crap with a HORRIBLE user experience. That's because they're designed by engineers to very specific designs to offer as little as possible, at the lowest cost. I'm not blaming the engineers, but rather the product managers and THEIR management - many of whom don't seem to be able to manage themselves out of a wet paper sack, much less understand what customers WANT. I think what customers really WANT are products that can grow with them over time, and do new things seamlessly, and that offer a personal and customizable user experience.
I think Harley would have been FAR better off just including an iPad Mini, or even a full-size iPad, in a waterproof, snap-in-and-out enclosure in the fairing (like the FBI fairing tried to do, but FBI didn't execute well on it), and then having the Angry Birds folks, or someone equally tech-savvy, write a kick-ass "
Run My Hog" app to enable the rider to display gauges, display the nav map, display the audio controls, receive real-time alerts, etc. and be able to move them around to wherever they want and resize them to their heart's content. Hell, I would buy THAT!
In this manner, new app functions could be added seamlessly, just like they do with or iOS or Android apps. Why should one EVER have to take their bike back to a dealer to have new code flashed into their Infotainment system? It's ludicrous! This can, and should, be done over the Internet - in seconds, automatically, just like all of my iPhone and iPad apps do.
The people who spec Infotainment systems still have a 1990s mentality... "it's worked for years, why change things?" The auto and motorcycle industries are often their own worst enemies with their resistance to embracing new technology. It's as if they never do anything until they are forced to do it... either by the competition or by the government. For example, they actually think that DVD-based Nav systems and dealer flashes are still acceptable in this Internet Age. Well, they're not any longer.... not by a LONG shot. The whole tech revolution since 2000 has passed right over their heads - and they don't even know it, nor do they even seemingly care.
Ken