There's possibly another reason why companies are going bigger that I don't believe has been discussed yet:
Bigger Phones Push Consumers Towards "One Device"
Majority of people I've ever seen with larger smartphones above 5" typically use tablets a whole lot less - or not even at all. While on one hand one would argue that a company would want a consumer to purchase both (phone + tablet) at the end of the day a smartphone consumer is significantly more valuable than a tablet consumer due to the fact that smartphones typically get more use than a tablet for obvious reasons (calls, messaging, etc.) and are obviously the device that people will carry with them statistically more often than their tablet - especially when it comes to men. Plus, more and more consumers are wanting to carry less. So, if you want a tablet, but at the same time you don't want to carry one, what do you buy? A big phone.
In what is so far proving true, BlackBerry CEO stated years ago that he felt that in a few years tablets would be obsolete. I don't remember his reasons, but he's so far proving himself right nonetheless. Large (10") tablets sell in the minority when compared to smaller 7-8" tablets (example: iPad Mini blows away the Air by comparison), but smaller tablet sales are declining due to the rise of big smartphones. Apple I really believe tried to stay away from large iPhones partly because they knew it would eat into their tablet sales (which it will: Mini sales will decline thanks to the iPhone 6 Plus). But, at the end of the day, they were losing way too much by not having a large smartphone (again: smartphone consumers are more valuable than tablet consumers). Notice that they also didn't update the iPad Mini's internals at all this year. Me theorizing, I think they wanted to see how much the iPhone 6 Plus will affect Mini sales (why update it if you think your phone will cannibalize its sales?). Instead, they opted to update the Air (which already sells poorly compared to the Mini) to see if that's where they can make up their possible lost margins on declining mini sales thanks to the iPhone 6 Plus.
At the end of the day, big smartphones are like a hybrid small tablet and phone to a lot of people. As a guy, I know I don't always carry around my iPad Air along with my HTC One M8 because it's just not convenient. I've sort of stayed away from big phones because they are big, but I'm not going to lie, I'm going to at least try out the Nexus 6 because I think it's checked mostly all the right boxes on my want list and Android 5.0 is the first stock android experience that is leaving me impressed as much as I am with Sense in my M8.
Big phones are going to change the tablet industry as a whole. Here's possible outcomes:
* Small tablets become obsolete (or at least anything below 7")
* Large (10"+) tablets become popular again
* Tablet direction changes perhaps to imitate the dying laptop market (i.e. all tablets come with thin, keyboard cover cases and are promoted as productivity devices... in which case Microsoft will have proven that they were just ahead of the game with the Surface series...Food for thought: The Nexus 9's main advertised accessory is a keyboard case)
* Tablets will no longer be just larger versions of their phone counterparts. OS will be designed very different to differentiate them apart from a smartphone.
Apple sort of got the idea right this year by having two phone models. I think Google and others will ultimately follow. A more normal 4.7"-5" smartphone and then something just shy of 6". Technically, Google did that this year as well by keeping the Nexus 5 in the product line. Perhaps next year we'll see both models updated together.
I will say this though: if Google does end up discontinuing (same with Apple) their smaller smartphone offering that's not a sign of stupidity. It would show that really the market is swinging towards big phones whether you like it or not. They wouldn't hamstring themselves by only offering one phone if it wasn't going to make them money or prove themselves successful in the long run. Just look at Apple. For years people complained about their small 3.5" and 4" screens saying they needed to be bigger. But, guess what? Those small phones still outsold everything. So, Apple knew how long they could utilize that phone factor and obviously this year is the year they felt they could no longer profit from those small sizes. The same is true in the opposite with big phones now. Companies are seeing they have to offer large screens. That's where the industry is going. Point blank.