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A high pressure assembly line, that produces devices at the ridiculous rates needed to meet high demand, also increases cost of production massively.

Some of these costs would be for overtime paid to workers, paying higher prices to secure aggressive component supplies, air freight instead of sea freight for shipping components and finished devices, overworked retail store employees, and even goodwill costs of providing doughnuts and coffee for endless lines of people who will probably not get a device anyway!

If demand is somewhat muted but still very reasonable, all of these extra costs are avoided - and the bottom line is boosted.

When you think about the overall implications, it actually makes immense sense for Apple to engineer a marginal drop in volumes for a few years, till everything is streamlined and the higher volumes are possible even with upgraded specs without paying ridiculous costs.

Most people don't realize - that when Apple makes a minimalistic design, with lighter hardware, fewer ports, etc, it is actually dramatically boosting its profit margins. With the kind of volumes Apple handles, even small shavings in materials and specifications quickly add up to big numbers.

Just imagine, if Apple is saving $2 per iPhone by removing headphone port, and using smaller battery, that nets it about $400M extra for the 200M iPhones made. And that more than covers the profits they make from selling a million extra iPhones!

To add to the above post, Apple is also making huge strides in beefing up its ecosystem play. They know that in 12 months there will be 1 billion Apple Pay compatible devices in the market. Apple Pay being available for web shopping from Macs is also a massive game changer. The revenue from Apple Pay is insignificant now, but is geared to explode.

and it isn't just Apple Pay. Apple Music, ITunes, Apps, Maps, iCloud, everything is getting perfected by the day. And Apple knows that the game in the future will not be about hardware but about ecosystem.

Apple's device upgrade program itself is a clear indicator of this strategy. As more and more customers sign up for a program where they have committed to upgrade to new iPhone every 2 years, Apple wins big time by releasing marginal upgrades!

Apple is going in the direction of holding off as many upgrades as possible for as long as possible. This is the simplest way for them to keep their profit margins high, without taking huge hit on volumes.

This strategy is clearly visible in how they have reused the form factor in iPhones, the soldered in and non-user-upgradable components in Mac computers, etc. Many specs like wireless charging, OLED displays, etc are quite mature now, but Apple is not at interested in rolling them out. They took over 3 years to push out Touch ID in Macs!

Apple is more intent on doing the least it can possibly do, and still have reasonably high sales. And they know fully well that they can pull many rabbits out of the bag whenever they want. In any case, this year is the 10th anniversary of iPhone, so it's obvious that they will be swinging for the fences on that one. Most customers have avoided upgrading to 6s and 7 because of this one factor. My 6 is quite fine, except for a battery that dies rapidly. I would rather change the battery today, and get an iPhone 8, than get a iPhone 7!

Yes, this is something that pisses me off too. But I can see exactly why Apple is playing the game this way. Their operational risks are already too high with the ridiculous volumes they need to produce - so it's better to have a small drop in volumes if there is a big rise in margins to compensate.