[selectodude]

The first iPhone was actually being sold unsubsidized. That's why you could pop in and buy one from the Apple Store in cash. It was one of Apple's concessions to AT&T. iPhone 3G was subsidized and sold for $200.

[altano]

Define subsidized. You had to get a two year contract. You couldn't walk into the Apple Store and buy an unlocked iPhone.

AT&T may not have been handing Apple cash as part of the deal, but the contract made it more expensive than the price of the phone.