Good points about cost reduction for the older gen products that Apple still sells.
The additional USB and the more costly process for better analog support, however, clearly point to a future Apple device. Whether that is the iWatch or something else, we shall have to wait and see.
"This is the big question. Why go through all the work of this redesign, including the move to a separate DRAM package? The Apple TV is just a hobby. No? Two hypotheses have emerged. The first one centers around economics."
Its not just the Apple TV. The new ipod touch also uses A5, which still sells in millions. They still sell the iPhone 4,iPad 2, ipad mini which all uses the A5 chip. The die size reduction thus might make sense for them. In addition, they are rumored to release iwatch/iphone lite etc which could also use A5.