Please Note: Some assumptions ahead..
If I remember correctly, the stock cable inside the 1Z is a OFC or OCC copper from Kimber Kable and not the Van Del Hull. Although the real price of the PWAudio Copper Cable would cost less to manufacture, PWAudio is probably not going to sell it to Sony without a good profit. Sure, Sony could engineer its own cables. But, what if Sony did not have an R&D team for these type of analog cables and would have had to establish a new team for it, which would ultimately result in the same price of the cable.
In my opinion, 1Z is not a cost-no-objective-flagship. Someone on the Sony 1Z thread, called the 1Z an engineering marvel. Based on what I have read and seen (internals), there was not much engineering needed once they had created the 1A. All they did was, take the internals of the 1A, swap a couple of components for better ones, and then switch the body to copper and plate it with gold.
That does not mean that the 1Z doesn't sound good or that I don't like it. I tried both 1A and 1Z at a Canjam and was able to hear the difference even on the noisy show floor. While the difference in SQ between 1A and 1Z exists, it cannot be attributed to cost-no-objective-engineering. It seems like they took the short cut like A&K. They switched the body and a few components. They heard a decent difference and the SQ must have been on the same level as the AK380. Market research would have shown them that, people are ready to pay $3k for a good sounding DAP. So regardless of how much engineering effort went into improving the sound of the 1A to create the 1Z, it seems like, what dictated the final Retail Price of the 1Z here was the market, and not the cost of production. I am willing to bet that the cost of producing a single unit of 1Z is not more than $500.
Apart from earning profits, I am sure this move would have also helped with their product segmentation to attract customers who would like to pay a premium price for luxury products. And would have also helped the company to position itself as a manufacturer of luxury products.
Yep, its bit of an annoying thing in the world of electronics. We see very good products everyday where the manufacturer could have used a certain high quality part. But then, even a marginal increase in cost, would cut into their profits. Let's say it costs $500 to manufacture the 1Z with the Kimber Kable, and it costs $20 more per unit if they wanted to go with the PWAudio cable. Sure the $20 seems marginal. But $20 x 10,000 units = $2 Million. Why sacrifice $2M, when they could sell the same product with a a cheaper part?