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The number of people with a smartphone but absolutely no wifi in reach is close to zero. Apple offers 50gb for a dollar a month, some competitors offer some X gb for free.

Based on that most people use apple devices in wifi networks it makes sense to let people pay extra for more internal storage, as cloud services is apples future business.

Phones will not be the future, or better, will not be updated every year as they do now. More and more people use their phones for longer times now, as the average customer uses calls, messages and safari plus cam. For this you do not need an up to date phone every year, there is simply no development coming anymore.

Some cosmetics like more GHz (which nobody notices during usage), a new body, some more wireless connections, but more will not come.

Believing apple will depend on the iphone is a false belief, like people used to believe Nokia will be on top forever. Apple focuses on new services, not on the phones. They only update these for their stock market sheeps, as long as their numbers for services look better and their apple car comes out.
 
There are numerous places the iPhone has fallen behind. The various different Android phone brands offer (though these are not on every phone out there): waterproofing, more memory, more storage (16gb base model is ridiculous), upgradeable storage, faster processors, a better screen, wireless charging, and a headphone socket (rumoured to disappear with iPhone 7).

The iPhone is behind the competition in almost every way.
 
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