All applications are upgradable, even Play Services are upgradable, and developers get the support library to get all the new things to all devices.
So I believe they did a great job at reducing fragmentation in the sense that it no longer really matters what version you have, you still get all the newest stuff. Just look at every iOS version announcement: 3/4 of the new features are in the apps: iMessages, maps, home screen...
That's not true (the most of the OS part). They untangled their own stuff (Play Store, Google services and so on) and can update those as they see fit. The OS stuff is still monolithic. Most of serious security issues still require full OS updates. Also supporting a new major version of Android runtime still require a full OS update.
There's a reason that "new emoji" is a headline feature now, a lot of the system has been pulled out and is distributed seperately to the OS now so it doesn't have to go through the vendor's QA cycle.
... they have gotten better at this.
The Nexus 5 no longer works.
The Nexus 4 still works, but its battery is puffing out.
The Nexus S has no hardware problems at all, but it's too underpowered to run modern software.
The model "phone vendors nefariously build products with short lifespans, regardless of what people want to buy, so that they can sell more hardware" has trouble explaining why the longest-lived phones are the earliest ones. It seems more likely that the phone vendors of today build phones with short lifespans because bitter experience tells them that building a robust, long-lived phone is all cost and no benefit -- the phone costs more, it's heavier, it's fatter, and all your customers replace it before the cheaper, sleeker, more attractive phone would have failed anyway, meaning they actually get zero minutes of extended lifespan.
It's the same reason animals age and die.
Maybe because first you try to make your earlier products good to get customers, and then once your business is going and you've grabbed a portion of the market you find it profitable to take risks like this?
The phones of today aren't "built with shorter lifespans in mind", but they are built with more tightly packed components, more energy-dense batteries (to support their power-hungry CPUs and large amount of RAM), etc. Because that's what you need to do so you're not "too underpowered to run modern software." Which is necessary to sell phones to people.
If you made a phone and said "hey, this will live as long as a Nexus S, but it's not going to run FB or Clash of Clans or VR or take very good pictures (HDR is compute intensive)".... good luck selling that.
With the difference that younger (newer) animals are better built. :-)
If vendors choose to not use this feature it is on them.
If they say "install it this way or no Play Store for you", every manufacturer will follow.