Why not use a legacy flagship rather than a new mid-class smartphone? (Galaxy Note 3 2013 vs. A7 2018)

Question

Why does Samsung not keep producing the Galaxy Note 4 and Galaxy Note 3?

These devices, despite of their release date as flaghsip device in 2014 and 2013 still perform very well, and are solid mid-class phones today.

A great example: Note 3 (2013) versus A7 2018 (2018):

The Galaxy Note 3 is equipped with:

• Air View hovering controls and tooltips

• Air Gesture controls

• Humidity sensor (hygrometer).

• Temperature sensor (thermometer).

• 2160p video recording (yes, the Galaxy A7 2018 still only has 1080p at 30fps‼)

• 1080p@60fps smooth video caputuring capabilities,

• Infrared transmitter,

• Slightly larger battery

• User-replaceable battery (thus custom back covers and wireless charging cover)

• S-Pen, the highly functional stylus.

• Multi-window pop-up windows with small minimum window size.

• Dark user interface (as known from legacy TouchWiz versions) with more icons in addition to the text, also in context menus.

• More customizeable and ultimately vibrant camera application user interface.

• Homescreen with more options, page slider and more drag/drop shortcuts such as AppInfo.

All of which the A7 2018 has nothing.

Of course, the Galaxy A7 2018 has some advantages such as quick-launching camera, but why does Samsung not keep producing previous flagships that could be an excellent mid-range device today?
And features such as the camera quick launcher can simply be implemented via software updates that hopefully do not have side effects such as the uglified Lollipop user interface after updating S4, Note 3 and S5.

There is no mid-range Galaxy Note (there is LG G Stylo however), except Note 3 Neo, which got sold much longer than original Galaxy Note 3 despite being not as good as the original Note 3.

Answer 1

Well, there's 2 parts to your question:

• older model phones: I currently use a Samsung Galaxy S4, and I agree with you 100% that older flagship smartphones are still excellent devices for today. Features like a removable battery are going extinct, and that's a deal-breaker for me. Some of these older flagship smartphones are still available for purchase new, just maybe not from where you'd expect.
• why don't they do this: Well, a lot of engineering work goes into designing a new device, so manufacturers need to meet certain sales volumes to recoup costs. Also, manufacturing older devices runs into the issue of taking up "resources" (assembly line time, warehouse space) that could be better spent on the newer model. Finally, older phones use different components than current phones. Some of these components may no longer be available, or the contract to supply them has expired, or new contracts for new suppliers for components of newer devices prevents them from entering contracts with older suppliers ("exclusive supply").

Answer 2

There's a few factors at play here, some of them technical, some commercial. Don't forget that when Apple introduced this policy of introducing new generations of iPod with more features and completely discontinuing the old ones, people praised them for going counter to the tech industry norm of dropping the price of older models, which was seen as price-gouging of early adopters.

Costs don't work like that

The per-unit cost of making each phone doesn't decrease as the phone model gets older, because the components don't get any cheaper, so the margins would have to decrease in order to reduce the price point of the old models. Although the up-front cost of designing the phone has been paid off, there is an ongoing cost of porting new Android versions and/or backporting security fixes. People already get annoyed when their old phone doesn't get the latest Android version, and this would be even worse when their ex-flagship phone is already stuck on an old version out of the shop.

Can't always support new versions

The Android version problem is even worse than it looks. Sometimes new features require new hardware components to support, for example NFC host emulation for Android Pay, or Bluetooth LE. Sometimes these components are mandatory for supporting a new Android version. The old flagship phone wouldn't be able to keep getting Android updates, while a new budget phone would.

Even when there's no new headline features, the phone OEM is also at the mercy of their component vendors, who have to supply drivers for parts like the GPU, video codec hardware, cellular modem. They don't want to support new Android versions on their old hardware either, because they have the same problem with decreasing margins. If OEMs demanded longer support, component vendors would have to increase their component prices, which would make even the flagship phones more expensive.

Software integration is a variable cost

We've already mentioned that the software integration is a large part of the up-front cost of developing a new model, but it's not the same cost for every model. Flagship phones, with their slick camera app, swanky box features, and performance optimisations, cost a lot more to develop than budget phones. This is part of why the budget phones can be cheap in comparison.

Branding

One last commercial reason is that having a separate budget phone range allows the OEM to differentiate their products better. Samsung (to use your example) doesn't want the Note range tainted with the idea that it's old technology, and discontinuing old models allows them to avoid that. Keeping the budget range with a separate name allows it to be better associated with the price point it's targeted at.

Summary

It wouldn't be possible to offer last year's flagship phone at the same price point as this year's budget phone, it would make it harder for the OEM's marketing, and the decision of when to stop support wouldn't be entirely under the OEM's control any more.