What if these two phones are the same device? What if the big iPhone is the cheap iPhone?
The cost-size curve isn’t straight in computer hardware, because miniaturization is also a cost factor.
There is a point where making a MacBook bigger costs more, and a point where making an iPad smaller costs less. The 15-inch MacBook Pro costs more than the 13-inch, and the iPad mini costs less than the big iPad.
But there is also a point where making an iPhone smaller costs more — in component efficiency, battery life, R&D, different materials, etc. That’s one reason why the iPhone 5 costs (very roughly) about the same to build as an iPad mini, which is much larger.
You might assume that a bigger iPhone would be a more powerful one; that the iPhone+ (or whatever it’s called) would be an “iPhone Pro” of sorts. Maybe so. But maybe it’s also cheaper than a smaller iPhone, because weight, size, and efficiency aren’t the primary design goals. For example, the battery could be bigger. Or maybe it could contain older, cheaper, more-plentiful, less-efficient components.
To be sure: This is just an idea. I lack Tim Cook’s knowledge of the component market. It’s possible this is totally incorrect logic. Maybe the “cheap iPhone” will be a small, fat, plastic thing like the old iPhone 3G. (I hope not!) Maybe the big iPhone will be a $900 iPhonePadPro. Who knows.
But it is good to remember that there can be a bigger cost to making things smaller.