If you cannot innovate, then lower the price!
I will not pay USD 700+ for a new phone that gives me nearly no significant improvements (real improvements that I will feel on a day-to-day use case), compared to my 1,5 years old iphone 6!
If tomorrow my iphone would stop working, I would buy a Nexus 5X (or something comparable) for half the price of an iphone 6s... The "apple factor" for me is not worth more then double the price of the competition.
Apple started to lower the prices in the history also when they could not innovate anymore, best example is the ipod. When I bought my first ipod in 2004, the iPod Photo 60GB cost me a whopping US$ 599...
Fours years later my ipod stopped working and I replaced it with the iPod Classic 80GB for US$ 249 !!!
By the way, its not that I cannot afford an iphone, but I want to get something for my $$$