[citation][nom]fancarolina[/nom]Ok answer me this. What smartphone is available for less the free without a contract on a major carrier. All smartphones have the associated costs you speak of. All cell phone contacts have early termination fees. If you can't afford the whole contract don't sign one.Apple wants to attract customers who are affluent enough not only to buy their phones but who will also buy Apps. This is where Apple makes their money. [/citation]
Well, in the US, perception may be different as the bundled sales principle is more common, so you miss the point. But if it was possible to buy a iPhone 3Gs without a contract for a data plan, it's pricing would probably be nowhere competitive compared to the other manufacturers.
In Europe there are countries out there where bundled sales (devices + contracts) are illegal (for the sake of transparency and consumer protection).
In those countries like Belgium where iPhones are to be bought "standalone", the iPhone 4g 's full price is >650euros/32Mb and price for the 4Gs still unknown. Android phones such as HTC sensation or SGSII sell for 450 to 550€.
You won't see an iPhone 3GS in those countries as they are simply "unavailable": they are only in countries where they can be bundled with a contract and in those countries, you can only buy the latest model.
To get the "free" 3Gs phone with AT&T in the US, you'll have to pay at least 1320$ over two years, and that's the cheapest plan (450minutes/200mb)... The situation in Europe is quite similar with an initial fee of 59€ + contract of minimum 50€/month for 24 months. So, you'll never know how much the iPhone 3gs costs to the operator, but they make you pay a huge price for it as you can have a voice/data plan for almost half of the price if you buy it without a phone.
So, the truth is that the iPhone 3Gs is not priced competitively and that's hidden in the contracts. Apple starts loosing more and more market against competitors as cheap smartphones are getting better in quality. The examples of Nokia in the posts here above are irrelevant as well. Nokia has enjoyed great profits and a market leader position for more than 10 years thanks to their diversified products range before they totally missed the smartphone turn for different reasons (OS strategy mainly). In fact, had Nokia not managed to keep important sales volume in the low end phones, they would be dead long ago already!