I think both are true. If someone kept a phone for 2 years on contract, anything priced over ~$750 is absorbed by the carrier (probably made up by reoffering th

I think both are true. If someone kept a phone for 2 years on contract, anything priced over ~$750 is absorbed by the carrier (probably made up by reoffering the phone cheaper to someone who doesn't need the latest and greatest). But on the flip side, phones these days are truly impressive. And by raising the prices, Apple is choosing Quality and Speed over Cost. If they have to pump out 3 phones a year, and each has to be better, then spending more allows them to keep going.