I read once where Bill Gates predicted that eventually people would buy software and that the hardware would be free. I can't remember where I read it ('Business at the Speed of Light', maybe?) but it stuck with me as just, well, ridiculous.
Have you looked at any carrier's web site recently? Tons of $0 full-featured Android smartphones, and tons of apps for sale (subsidized by service fees, of course).
I guess when I read it I didn't think "hardware is free as in you'll be paying for a contract of service where the cost of that service includes the cost of the hardware".
I mean, if we're to be able to redefine 'actual' costs like that, maybe my house is free... it's just included in the cost of my bank sending me a statement every month.
I do see your point, though: it definitely seems that way, but surely nobody can argue that the production cost of one more piece of hardware is more 'free' than that of a piece of software.
The entertainment market is another good example of what he might have been thinking of. Many games consoles and video devices have been sold at a loss, though it's obviously a greater gamble than selling payment plans disguised as service.
You conveniently left out that there are way more $$$ smartphones and tons of apps for FREE. Even inside walled gardens.
Not to mention the desktop and laptop space where you buy your hardware (and OS if you're not using a free one like Linux) but then there are a lot of free apps.
Have you looked at any carrier's web site recently? Tons of $0 full-featured Android smartphones, and tons of apps for sale (subsidized by service fees, of course).
We're already there.