Most people upgrade their device every 3-4 years but not everyone is on the same cycle. Apple need annual updates to make sure potential buyers don't go for a newer Android device. But, after that 3-4 year cycle the incremental updates have snowballed into a whole new phone.

In effect Apple do release a new iPhone every 3 years for most people. Phones are now in their 'everyday appliance' stage with diminishing returns on buying annually. Or to put it another way: would you upgrade your washing machine or refridgerator on an annual basis?