[sdfx]

>There's no extra cost to ship out all software with that feature after it's coded

By this logic, Chipmaker should only sell their most powerful processors, because the actual manufacturing-cost is not really the reason for the price difference between a top of the line i7 processor and a different one with lower specs.

You can look at it from a different angle: Let's say you have a powerful program and you are charging 1000$ for it (e.g. Photoshop). Your market research has shown that a lot of "casual user" are looking for a product like the one you are selling, but are not willing to pay the 1000$. So you develop a version without the more advanced functions and sell it for 200$ (e.g. Photoshop Elements).

It's not really about "not confusing the user", but about offering another option. How does this hurt the consumer?

[shard]

I think that actual manufacturing costs are often the reason for price differences between a top of the line and one with lower specs. The processor dies are huge and costly, and throwing out non-perfect dies is undesirable. Due to the intricacies of silicon manufacturing, the same design can have different maximum speeds on different dies, and due to defects, the same design can have different operational sections on different dies. This leads to speed grading and the disabling of cores/caches, and hence a whole line of chips from one design.