Both matter; since the software was not really realistically upgradeable thing, the best upgrades are with the nuts and bolts
The purpose built military bombers were wildly inferior to the Do26 civilian plane for long range naval recon. As the Luftwaffe decided IOTL, it was simply better to start from scratch then develop a flawed design.
Yeah, but just how flawed were they? We have a few numbers and little else to form an opinion, but we know the Ju89v2 did manage to reach 9.000m with a 10t payload hinting at what could have been achieved. I believe that they were scrapped due not of actual problems, but due to the fact that they were planned around weaker engines and better offers were already in the horizon, engines that would need a new fuselage to get the best out of them. But getting one of them in service in order to train crews and develop a bombing doctrine would have certainly been useful rather than end with 3 different types of medium bombers, if they can waste, lets make them waste in something different at least.
The Ju89 flew with 10t to 9.000m on 900PS engines, surely it could have done long range trips with 880PS diesels with fuel to spare... and the aircraft ended up doing EXACTLY THAT, well, not with diesels, as the Ju 290, after a leisurely long development period that made it into a civilian airliner and then into a MPA.
Might as well try to dieselize the FW200 rather than bother with making the Do19 work.
Also an option, also a civilian aircraft that literally broke under operational stress.
An expended He116 with the Jumo 205s might well be an option with some development.
Something along those lines, with a less brain-dead leadership such an aircraft would have been a must, you cant see crap out of a Uboat conning tower in the high seas, you need eyes above.