When the iPhone first came out, it was completely unsubsidized and users paid up to $599 for it. I believe that within the next 1 to 3 years the iPhone will go back to this model and here are the 2 reasons why: 1: When you sign a contract with AT&T, you aren't able to buy another subsidized iPhone for another 24 months. Maybe 21 months if AT&T likes you. Either way, thats a long time to have a single cell phone. You carry it around in your pocket all day and it gets knocked around; it gets dropped on the ground; half the iPhones I've seen people have get their screens cracked eventually; smartphone technology advances pretty rapidly- all reasons that people would prefer to upgrade their cellphone sooner than the 24 month paradigm. Especially Apple/iPhone consumers, who are probably a little wealthier and technology-aware demographic. So Apple must be frustrated in at least some way that they can't sell people new iPhones who want them maybe every 12, 16, or even 18 months. If the marketing plan was that you paid full price for a contract-less iPhone, and then the subsidy savings were reflected in a lower monthly cell phone bill, Apple would reap a lot of benefits and sell a lot more phones. T-Mobile USA already has a model that offers this. Their standard plan with unlimited text, unlimited web, and 500 anytime minutes is either $79.99/month with a subsidized phone or only $59.99/month without a phone subsidy. I believe that if similar options were available for the iPhone, Apple would sell many more iPhones. 2: While the eminent cell phone networks in the US (Verizon and AT&T) are currently on completely incompatible network technology, by ~2013 they will both have rolled out large LTE networks. A single iPhone could easily be made to be compatible on both networks. Apple, leveraging its monopsonistic control over the world's most desirable phone, could facilitate a service price way between the two companies. And they could charge high prices selling iPhones outright, which people would gladly pay because they'd be getting cut rate subscription prices from the cell carriers. I for one hope that the unsubsidized model (with lower cell subscription prices) comes back. 24 months is way too long to have a single phone. If I could, I imagine that I would like to replace my cell phone every ~16 months.