But keep in mind, today's smartphone are equal to or outperform a lot of those bargain laptops you'll find at that price. At least in the $200-$400 range.
NOT that I'm saying it's cool, but I think what makes cell phones so expensive isn't the hardware inside for the phone itself but the radio/wireless capabilities in such a small form. For instance, I have a pair of wireless headphones. If they weren't wireless, they'd probably cost about $120-$150. I bought them for $250. Wireless technology/satellites etc ARE expensive, we just don't think about it because it's such a common thing.
Also, they know people will buy the next best thing, no matter the price. That's why smartphone prices usually drop so rapidly within just a few month. I do agree a smartphone should be no more than $200, especially with a contract, MAYBE $350ish without. But the fact is, technology in a compact form is not easy to make and requires a lot of high tech stuff/staff to create. Mass production =/= simple, but new technology = expensive. This is the way of life. Sad, but true.
Let's just be glad we don't live in the future generation of marketing and advertisement. Otherwise, contracts are ESSENTIAL, and the only way to get a cheaper phone would be to take 100 random surveys and sign up for 50 website memberships so they can spam your phone with holographic notifications about their upcoming half off sale on flying couches.