What am I missing or not understanding?
In my experience, the firmware development cycle is far slower than for native software. The interactions between electronics and the code can be very difficult to debug. Getting the power source to work reliably. Manufacturing the case in volume can hard to ramp up. Injection moulding, assembly, retail packaging, etc can cost more to develop than the product.
When you write that your unit economics are good, I wonder how far along the path of being ready to manufacture, package and distribute you have gotten. Any team experienced with manufacturing consumer electronics at scale would have prior experience with all the necessary steps. If you are looking at sub-contract design/manufacture, then you need to make a very substantial up-front investment and guarantee certain volumes, etc.