It wasn't really my intent to compare the 900 Vulcan engine with the much different 1500 Vulcan engine and much heavier 1500 bike. The point I was trying to make is that if Harley can increase their 883 engine to 1200 cc and keep everything else (fuel injection, weight, etc) essentially the same and realize a very noticeable horsepower and performance increase for only a few hundred dollars actual cost, then why not do it?
Certainly the vast majority of Harley Sportster riders would select the 1200 engine over the 883 if the cost difference were only a few hundred dollars. I don't see why the same thing wouldn't be true for the Kaw Vulcan riders.
I'm not trying to argue. I'm just saying there is a big performance difference between the 883 Sportster and the 1200 Sportster. Yes, I've ridden them both.
BTW, increasing the displacement to 1200 cc the way Harley does in no way affects what accessories are available or how easy/difficult it is to work on. Nothing else is changed other than the engine having greater displacement and greater horsepower.
The Harley Sportster engine is just like those older engines I was referring to though. Little has changed in that motor except for the addition of Fuel Injection a couple years ago. Thus, it's more affected by small changes in displacement than a 900cc Vulcan engine.
A 1200 would have more performance, but it would be nominal. You wouldn't really 'feel' it. It probably wouldn't be worth the cost for most riders. The engine itself would be much more complicated to increase to 1200ccs of displacement than a sporty motor, and keeping two bikes like that in the line doesn't make a lot of sense.
Harley has a lot more riders than Kawasaki does though, and that needs to be kept in mind too. Harley can more easily keep the 883 and 1200 sportster lines, and the various upgrades and kits for the two.
And, like it or not, it has to make business sense. Adding a 1200 to the lineup would fragment the line, and would hurt the marketability of the line (For aforementioned reasons). Having fewer bikes on the line that fill more uses makes for more marketable machines, because there are a lot more available accessories and such for those bikes. One big advantage HD has over Metrics, is the fact that they are infinitely customizable thanks to their relatively small line (only a few actual chassis, they put several models on one of a couple chassis, not unlike Kawasaki), immense popularity, and incremental changes over the years (HD rarely radically changes anything. There are a number of parts on a 2012 big twin that can be replaced with parts from the 80's!). Thus, it makes sense for a third party, like Kuryakyn for example, to build parts for their line.
If Kawasaki, which has less riders than Harley, fragmented the line with new models, these third party companies would likely not see it a smart business decision to build as many accessories for Kawasaki. With two bikes on the line, you have a lot of riders on just two models (ultimately). Most 900 accessories fit most 900's, etc. Thus, you get a third party market that makes the line viable.
One of my favorite things about the 900 is that it IS an extremely popular bike, meaning I get a LOT of options for accessories and the like!
I'm not saying a 1200 Kawasaki would be a bad bike, I'm just saying it wouldn't be a good solution for the company, and it would present drawbacks to itself and the rest of the line that wouldn't be worth the very mild difference in performance and otherwise. REPLACING the 900 with a 1200 perhaps, but again the magic number is 1000. Being under that keeps insurance and the like very cheap!
Also, cost IS a primary factor in a lot of sporty riders upping to the 1200. Getting on a big twin is not a low cost investment by any means. However, you CAN get on a Vulcan 1700, in fact, you can do it for about the price of a Sportster 1200! So, there again, most of us would rather spend the money on the 1700 (or the V2K may he rest in peace!). In fact I've seen used 1700 classics flirt with used 900 prices. There just wouldn't be a reason to 'upgrade' to the 1200, so it would just be a fragment of buyers choosing either the 900 or 1200 as a first bike (or a 'last' bike, as it's very popular among an older crowd that wants a lighter and easier bike, or even a 'cheap' bike as I can vouch for it's viability as even a long distance tourer but at a low initial cost, low cost to insure, and low cost to maintain), and then upgrading to the 1700.
There are niche gaps in the Kawasaki line, as it IS a line, like Scott said, designed to fit MOST riders, not ALL. But as a consumer, I am not bound to one company. If I were in a niche that couldn't be filled by either the 900 or 1700 line, I'd go with someone else! It wouldn't make sense for Kawasaki to fill that niche, because it could make their existing bikes less marketable (by increasing production costs, or fragmenting the line, etc.)