[citation][nom]dalethepcman[/nom]If you buy a "subsidized" cell phone, you pay much much more than if you buy direct. Also you end up with a carrier locked version instead of an unlocked version.A 64GB iphone 5 costs $850, cellular service costs $45/month (x24=1080) for unlimited everything on pre-pay.A subsidized 64GB iphone 5 costs $399 (save 450), Cellular service costs 120/month (x24=2880, lose 1800) for 2GB of data, and unlimited everything else.Net loss of $1350 over a 2 year period Vs buying outright.[/citation]
All of that is probably true. But part of the reason the iPhone is still $850 is precisely because the cost of the item is largely opaque to the consumer. As VelocityG pointed out earlier, HD televisions crashed in price over a matter of years as production costs diminished, and as market demand placed downward pressure on vendor pricing.
If there were no option to pick up a putatively "free" iPhone as part of your cell-phone-service contract, then many fewer people would consent to buy an iPhone, and Apple would likely lower the price. So while you're scoffing at all the lemmings who get soaked in the long term by bundling the cost of their phone with their contract, keep in mind that you're indirectly getting soaked too.