Yes.
It was to significantly drop the cost so their margins were higher. Aluminum and the machining is far more pricy and premium than plastic.
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IPhone has 5+ antennas. 2+ around chassis, and others behind the rear windows. Your perfect phone leaves no apertures for antenna.
A new iPhone might get upgraded with more cellular antenna, or more wifi antenna for MIMO.
That would be a horrible design.
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New iPhone user?
3G/3GS, two years, similar design
4/4S, two years with similar design
5/5S, two years with similar design
Ditching the chamfered edge design, is exactly inline with what Apple would historically do.
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Some use it, intelligent developers. Nonetheless, Apple is going to rework API and gestures entirely to help with usability on larger devices.
No, not 3.5".
There will be no devices sold as new with a 3.5 inch display. All three price points will be 4"+
1. IPhone 6
2. IPhone 5S
3. IPhone 5C
3.5inch will be able to be deprecated.