[rhino369]

To be fair, $500 subsidized was way way way above market and Apple had to cut the price significantly. Without the pricecut, the iphone would have probably been more a premium product instead of the default phone in America. They would have still made a killing, but they would have opened the door for Android to mop up.

[mikehall314]

Wasn't it the case that the original iPhone was not, in fact, carrier subsidised?

That was where the big price cut in the iPhone 3G (at $199, down from $399) came from?

[makomk]

The original iPhone was, in fact, carrier subsidised. Apple got a cut of the special monthly contract required to use it. If I remember correctly, they had to offer an unlocked version in a few countries and it was several hundred dollars more.