Might this be a yield issue? It could be hard for Apple to make a profit selling the iPhone 5 for $99 along with the 5S the next model year. The iPhone 5 case is hard to make.
If the 5S is the top iPhone model then having the plastic ones as the less expensive alternatives with iPhone 5 guts allows Apple to make more profit per phone.
When Apple released the iPhone 5, they could build it for X dollars and sell it at a profit. We can safely assume that today Apple can build an improved phone for X dollars. The question is: For how much can they build an iPhone 5 today? Just because you can build something better today for the same price, doesn't mean you can build the old thing for cheaper. And if they can't build it much cheaper, then there's no point in selling it.
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The iPod revenue is down to only 2% of turnover. Yet makes up so many, many models surely it's line is also due for real shake up. Even at 2% with a jump at xmas there can't be that many iPods including the Touch being sold. They could kill off vast part of the iPod family.
They all make lots of money. It's not a large percentage of a hugely profitable company, but many many companies would be very happy if the iPod line were their only product. Sales are going down, of course. Every iPhone sale is one potential customer who definitely doesn't need an iPod Touch; they might want an iPod Shuffle or an iPod Classic in addition to their iPhone, but the majority will be just fine with their phone today. But I think they can just continue building these iPods and putting them on their website and in a small corner of the stores, and sell them forever. It's all money in the pocket.