Frankly, I can't believe once Jobs was gone that Apple didn't add a fan to the Plus to mitigate the heat related repair costs, but then I guess that might have been admitting the earlier models were actually flawed?

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They did. They also added either dual floppy drives or an internal hard drive, along with a few other changes Jobs would have disagreed with (internal slot, for example.)

They called the resulting machine "Macintosh SE"

It didn't make sense to go through and redesign the Plus, since they knew they had this other machine in the works.