If you look at the incentives for Apple in this scenario: It's best for them if we all think their phones are secure. And it's also best for them if they dont piss off LEO.
So the rational thing for them to do, is convince us all they have strongly encrypted their phones, while continuing to provide some type of back door, but hiding it well. Parallel contruction etc etc
I can't think of any reason why its "best" for Apple to keep LEO happy. LEO don't pay them anything and actively increase the difficulty they face running their business as well as reduce the trust the people who do pay them (ie their customers) have for their products, actively hurting their business.
The big fear is that pissing off LEO will result in harmful regulation, and, while that is certainly possible, history has shown the technology moves forward regardless. Consider the US trying to prevent the spread of cryptography. They lost that battle[1], and any government who picks a new battle will eventually lose it, too.
1. The only injuries in that battle were US companies trying to sell software overseas because they were forced to include sub-par crypto.
The amount of money Apple makes from (US) government contracts is utterly insignificant compared to what they make from selling directly to consumers. Which revenue stream do you think they would be least likely to gamble with?
That's a terrible idea. Because when the day comes that a security researcher finds the flaw (and they will find the flaw) Apple has to admit that they lied to their customers. And that's a very bad business practice.
The enhanced encryption is Apple's way of saying that it's not their problem if LE has a beef with you. It removes Apple from the equation. If LE starts knocking at their they can say that there is nothing they can do.
It reduces warrant less spying, and removes some of the ease with which LE agencies have been able to operate. LEA agencies can collect data with broad strokes anymore, they'll need warrants (which they should have needed in the first place and they will have to conduct targeted investigations now (which is what they should have been doing all along).
