Exactly...buying those phones without a contract:

For those who are not eligible for an early upgrade or who wish to buy iPhone as a gift, the prices are $499 (8GB), $599 (16GB), or $699 (32GB).

Source: http://store.apple.com/us/browse/home/shop_iphone/family/iph...

I question the sort of person who thinks that signing a 2 year contract is free? I have seen people do this before, as if what only matter is right now, worry about the future payments when they are due.

Contracts definitely come at a cost. I got the Sprint MiFi exactly one year ago for $149 - $100 rebate with a 2 year contract. I got the $60/month plan for unlimited bandwidth.

Now, Virgin Mobile (owned by Sprint) has a version of the MiFi with no contract and a $40/month plan for unlimited bandwidth (http://www.virginmobileusa.com/mobile-broadband/mifi-2200.ht...). Since I'm locked in for 1 more year paying an extra $20/month, I'll pay $240 extra than I should.

I think the sort of person who thinks that signing a 2 year contract is the same person who would be paying $50-60/month for cellular service anyway. If you need (or just want) data and text messaging, plus relatively basic phone service, you will likely pay close to that amount no matter whether you are or aren't under contract.

Given that assumption, and if you expect that your life won't change in a dramatic way that will require you to drop your cell phone plan in the next two years, there's really no downside to getting a subsidized device.

For 90% of the market though, that adds a $200 cancellation fee to buying a device which requires a contract (or forces them to delay their purchase for months). So that $299 Dell Streak actually costs me $499 (because I have to get out of my current contract), and I won't be able to get it at $299 until like next June or something, by which point the market may (will) look different.

Phones and non-phone personal electronics are different market niches, because they attract different clienteles. Maybe in a decade when unlimited data is like $10/device that'll change, but for the foreseeable future, most non-upper-class people aren't going to have more than one phone contract per person.

I stopped reading at that exact sentence. What a joke. And my car cost me $250 because that's how much my first payment was.

I was here to comment on that, too, only a couple of paragraphs in. I'm buying a Touch soon because that's exactly what I want - an iPhone that only uses wifi and doesn't come with a $75 a month bill.

Also, those are the exact same prices as the previous models of iPod Touch.

In other countries where unlocked phones are regularly sold, the retail price for an iPhone 4 is roughly between $1,200 and $1,400.

Don't disagree with your basic point, but your numbers are a little off I think.

Here in Australia (http://www.icyte.com/saved/store.apple.com/320295) the iPhone is AU$859 - $999 (currently US$785-US$913). I believe in other countries it may be cheaper still...

I guess a lot of that is taxes then, I picked UK and a few other EU country prices.

iPhone 4 - 16GB: 659$ Canadian, unlocked