[giantrobot]

Even if you did buy a new iPhone every year, all of your apps, content, and services immediately port over to the new device. An iPhone doesn't ask you for $60 to run the Facebook app on the latest model.

Besides that you're presupposing someone buys a new iPhone every year and that an iPhone doesn't have any more utility than a game console. Despite the capabilities of modern consoles they're mainly used for games and secondarily for streaming. For a not insignificant number of people their smartphone is their primary computing device. Smartphones are used for more and more often than gaming consoles. I also don't know a single person that buys a new iPhone every year. Even the most well off people I know that are iPhone fans upgrade only every other year.

Sony has had a weird history around backwards compatibility, Microsoft didn't really bother until the latest generation of their consoles, and Nintendo is pretty much allergic to the idea. Not only do consoles not do as much for people as smartphones but they require an investment in new games when you do upgrade.