iPhone 5 has A5 and iOS 5 as aces up sleeve, hardware features aside
The reason is simple, and actually does come back to hardware.
The iPhone 4 was the first iPhone to use Apple’s own in-house processor, the A4. Suffice it to say that iOS 4 was designed for it (the iPad 1 also runs on the same A4 processor).
Attempts at running iOS 4 on older, pre-A4 iPhones have been mixed.
Some features are missing by design, and as iPhone 3G users learned in particular, iOS 4 was designed to run on an iPhone with a high speed, low power processor.
As such, iOS 4 left older iPhones
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