I really don't get this. To be honest. It does seem weird to me that many if you are so happy with this news even though it is directly on your back.
I am not saying it is a bad thing they are making this money. I am saying it would be a good thing if they would sell the hardware for cheaper. The iPhone 4 without a doubt does not cost the same that it did 10 months ago. Why can these savings not be passed on to the end user. Especially when the user is purchasing 10 month old hardware with little revision in that time.
The reason for other smartphone generating less revenue IS the product life of each model. They waste a bunch of money trying to put out multiple models every year. How many new HTC Android phones are coming out in the first 6 months of 2011? 10? That is a waste of money, trying to hit the slightest needs of certain consumers. This one has a keyboard, this one has no keyboard. This one is 3.5", next is 3.7", now that one is 4.3". Etc.
I think you'll find that most Android phones are actually sold at $200-300 to consumers, just like iPhones. And the BOGO or even free sales amount to desperation to sell a few more before next month's version comes out. Possibly even because they made too many, simple "supply higher than demand".
Apple's plan is working better from a business standpoint. Make one model that does a whole crapload of stuff. If it misses two items some tech geek wants, oh well. No product can do everything. No consumer has only one need. Some days I need a basic phone and nothing more. Other days I need to use gps or internet, etc. It's my problem to decide what I need and buy accordingly, not Apple's or HTC's.
Also, I agree 100% with Snowy_River. Perception of a phone that drops from $200 to $0 in 2 months is that the phone is crap. Sure, there are some people who won't care. But many, many others will look at the next phone instead. Which, Hey!, is $200. And Much, Much Better!
My only annoyance is paying $100 for another 16GB of flash memory. The $200 is fine to get in the door, but it literally took me weeks of going back and forth to decide whether to get the 32GB. $50 seems more correct in my mind.