If i go to the AT&T website, they list the iPhone 5 at $649. you get a $450 subsidy by signing up for a 2-year contract, but that doesn't mean the phone is priced at $199.
Say you buy the phone for $650, and then sign up for service at $80/month or whatever AT&T charges.
Meanwhile, your friend Susan buys $200 for the phone, and signs up for the same service at the same $80/month.
The only difference is that she promised to pay a fee if she decides to switch carriers in the next two years.
Do you still think the phone is really priced at $650? To me, it seems like some fairly trivial market segmentation. The phone's regular price is $200, but they're making some extra money from people who place an abnormally high value on being able to switch providers on a whim.
Straight Talk provides a $45 plan that's very similar to a much more expensive AT&T plan. (Perhaps most iPhone owners are too cool to step into Wal-Mart.)
