For performance. They can outcompete against others by moving to bespoke hardware. My iphone x cpu is ~ 13” MBP in performance, which is bonkers.

W1 chip seems to have better performance and power than any other chip. A10 A11 seems to have better performance and power than any other chip. I see a trend..

Absolutely! That's why the Apple Watch, for example, is an unqualified success compared with any other wearable. Qualcomm, which is the only real rival in that space, hasn't come out with a new wearable-sized SOC in forever, leading to the downright abandonment of many wearable product lines from pretty much everyone except Apple.

No, that success is because apple is literally a fashion brand. How many people do you think that wear apple watches could even tell you what hardware is inside it? Sure, it runs smooth, but that's not why they have it on. Nobdy is streaming hd video or running heavy applications on it.

With the W1, battery life and bluetooth that actually works as it should have from the start.

Apple claims the W2 chip is 50% more power efficient than existing Bluetooth/Wifi chips on the market, and is 85% faster than the W1 chip for data throughput.

Existing Bluetooth hardware has so many hardware and software bugs that it would [hyperbole] a [large thing]. Apple should absolutely control the BT hardware/software stack, there is no other way they can offer the Apple Experience without it.