“Painful” could easily (and mostly likely) refer to extremely low profit margins that would take several years to pay off the development costs. And that quote specifically refers to the base 64GB version. The price difference between that and the 256GB version was way more than the increase in storage costs, despite that being the only difference.

Also, I absolutely knew you were going to reply with this quote despite it not being evidence. Congrats on being extremely predictable.