Why Clip Zip and Clip+ Processor (Rockbox) AS3525v2 is discontinued

That company lists Sansa Clip clones on their website.  I suspect the reason that Sandisk picked them was that it was cheaper for them to buy the clone rather than make the original.  

It is probably tremendously more profitable to sell the new Jam and Sport models to everyone than to front the costs of continuing to make the old models.  You really want to have as large a volume as possible.  Even back when Sandisk sold a ton of different models, internally they were mostly the same device with a different plastic shell to minimize costs.