TheByte

Centurion

RikfromBelgium

Cellphones in Europe coming with contracts have always been sold in the manner that you sign the contract and then leave the store with the phone. The first generation iPhone was sold in unique way that you could buy the phone and activating the phone by singing up to a contract at a later stage. Unfortunately for Apple things didn't go as planned. People bought the phone and unlocked it escaping the full cost of the phone. Therefor Apple is now following the European model of forcing untrustworthy customers to sign a contract right away.

The $199 is the price for a subsides phone. In other words AT&T will sell the phone to you at $199 if you use their services for 2 years paying a fixed monthly fee. An unlocked iPhone at it's full cost will land at close to $700-900 or €700-900 in europe.

Such reports tend to be written from a very naive point of view not taking into account things such as R&D as well as expensive patents and trademarks.

Germaniac

Well this only adds to the point the article is making, then, and that is that the cost of producing the basic iphone is close to, if not more than, the $199 asking price, which (as the article establishes) is being subsidised by the phone's carrier.

"The cost estimates don't include software development, packaging, shipping or included accessories like headphones."