[dwaite]

My speculation is that Apple believes that people are lengthening their purchase interval on new phones not primarily because of cost but because they don't see the value. So, Apple is focusing on higher cost "1st year" phones which provide more differentiation on value to the old phones.

They also may stop just discounting the phones as they become "2nd year" phones, similar to the setup they have with the iPad and iPad Pros.

This both means more profit per phone to account for the decrease in sales due to lengthening time between phone purchases, and a bit more motivation to update to the next sexy 1st year phone rather than the cheaper models due to explicit feature differentiation.