But why the compromise? With the iPad Air and mini Apple was basically saying the only choice you have to make is screen size. Sure the mini display doesn't have the same color gamut as the Air but aside from that the two devices are identical and it's something that Apple never mentioned (and a fair number of people probably wouldn't even notice). If the "iPhablet" gets a better camera that includes OIS it will won't be just a screen size choice. People will be forced to make a trade off that they shouldn't have to make.
Why the compromise? Seriously, I know you are one of the few adults around here. Surely you understand and don't dispute life is a series of mostly difficult or awkward choices and compromises. Very little is dot-to-dot easy. I know you know that so I'm surprised you ask this question.
Let's assume this rumor is true. I can't say why Apple would put OIS in the larger version and not the smaller, but I bet it's either technical or OIS in the 4.7" while maintaining the $199 price point AND it's expected margins isn't feasible.
As I noted in an earlier post, I really don't think most people are going to choose phone sized based on which has the better camera. That has NEVER been the rally cry around here at least, i.e., "I don't know why Apple doesn't make an iPhone with a better camera." No, the iPhone camera is generally regarded as one of the best, if not the best, among smartphones. What has had so many rankled around here was the lack of a Galaxy or Note sized phone. So, size, not camera, is going to be the chief decider for most buyers.
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As I said, any "regular" company would do this. But I guess I expect more from Apple.
That expectation then is unreasonable. Apple has a history of literally gouging customers for CTO options, charging 2-3x retail prices for HD, SSDs, RAM. Every iPhone and iPad ever made has had a $100 difference between the RAM, again, well above even retail prices.
So I'm not sure where you got this idea Apple was like a CO-OP and sought to keep prices reasonable for it's loyal customers. That's not Apple's MO at all. You are living in some kind of fairytale world.