You can get an iPhone "free" because your monthly mobile bill is $60-$100/month. Apple is still selling the 3GS for a pretty penny to your mobile provider, who is effectively renting it to you for a tidy profit. Do you think there are similarly "free" iPhones in Africa? China?
Apple is pretty famous for it's appetite for big profit margins (~42% gross margins). It's competing with an operation system that requires no licensing cost (other than Microsoft's patent tax) and hardware manufacturers who are used to razor thin profit margins.
Android is competing effectively in the "rich country" smartphone market. But it's positively massacring Apple in the rest of the world. Of course, all the while, Apple will take the lion's share of the profit. It remains to be seen if it's short-sighted to let Android run away with the market-share prize.
There probably are "free" iPhones in China, with similar contracts - but cell phones in the developed world tend to be prepaid, not contracts (78% worldwide)
Apple is pretty famous for it's appetite for big profit margins (~42% gross margins). It's competing with an operation system that requires no licensing cost (other than Microsoft's patent tax) and hardware manufacturers who are used to razor thin profit margins.
Android is competing effectively in the "rich country" smartphone market. But it's positively massacring Apple in the rest of the world. Of course, all the while, Apple will take the lion's share of the profit. It remains to be seen if it's short-sighted to let Android run away with the market-share prize.