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The bottom line is that Apple charges what it does, knowing it will get some money back on contracts with the wireless companies. If that stream of revenue were never at issue, I find it massively deceptive to insist that the price would be identical.

Even the most bullish fanboys on the Apple iPhone company forum, say it's not subsidized.

The sheer fact that you can buy one (or fifty) at a store without first activating it, is clear proof that it is not subsidized. End of story. But there's more...

We also know that the gross margin on its price was way out of line with other phones, and is now more reasonable. (The 8GB phone cost less than $250 to make, which is why they charge what they do for repairs.) Unless they're grossly incompetent, the sale alone is sufficient.

However, yes, I agree that Apple also takes the normal carrier subsidy for themselves. It is known that they take the ~$350 that the customer would usually get towards the phone for a two year contract. Their CFO even publicly said this is supposed to go towards future software updates.
 
Unless they're grossly incompetent, the sale alone is sufficient.

Some background: I'm 54 years old and a senior engineer. I've been designing, building, specifying, buying for projects for at least two decades. Thirty million for handheld terminals? No sweat.

I estimate that the iPhone project cost Apple around 15-25 million over two years or so.

I'm sure they've made that back, easily, by now.
 
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