AMD is doing the smart thing for once, piggybacking off of Nvidia's pricing. Nvidia's pricing is what is allowing AMD to charge more. AMD has learned to undercut Nvidia just slightly which prevents any response from NVidia so it doesn't initiate a price war which neither side will win. If Nvidia charges $500, and AMD comes in at $300 prompting a price response by Nvidia to $400, then you just lost half your price advantage. If the end result is a $100 difference, then AMD should have charged $400 to begin with and left Nvidia at $500, which is the strategy AMD is using now. AMD's job is to maximize their revenue, not minimize Nvidia's.
I see what you're saying and from a completely profit-based analysis, I completely agree with you. The thing is, right now, it's not so much short-term profit that AMD needs because they've finally managed to get their debts paid off and EPYC is starting to make them a killing in the server space.
What AMD needs is to gain back marketshare and in effect, mindshare. The way I see it, they have to do two things in order for that to happen and they did one of these two things with Ryzen.
First, they severely undercut Intel's pricing which made people willing to give them a try. They had to do this because people don't like to switch from something that works and Intel, for all its faults as a corporation, made absolutely fantastic, stable products that people love to use and who can blame them? They had great performance and great stability. People were always willing to pay extra to get those things and they did. They have to do this to nVidia as well because nVidia also makes great products that perform extremely well.
The second thing isn't really applicable to Ryzen but is VERY applicable to Radeon. Fix the software side of the company because Radeon drivers, historically, have been gawd-awful. This is doubly-bad when nVidia drivers have historically been rock-solid. More than anything, I believe that this has been the secret to nVidia's success. Like Jensen says, "It just works" and that's what people want so the driver developers at ATi have got to get their act together. If they don't, they'll never be thought of as good as nVidia no matter how well their cards perform.
Maximizing profit per item when you have a tiny customer base doesn't do all that much. However, if ATi makes a fast and stable arch, all that AMD has to do is be willing to make less profit per GPU and increase volume. This is the only way that they can recover from the aftermath of what was the mining craze. Polaris was a perfect storm because RX 4xx and 5xx cards were cheap and had a fantastic hash-rate per watt for Etherium. That made Polaris expensive and hard-to-find for gamers. It's probably a major reason that the GTX 1060 is the most popular card on Steam by a country mile. At the most popular price point for most gamers, the GTX 1060 was basically the only game in town for gamers.