"Free" phones already exist in conjunction with calling plans. Video game makers have sold systems at a loss in order to profit from the games. Amazon is experi

"Free" phones already exist in conjunction with calling plans. Video game makers have sold systems at a loss in order to profit from the games. Amazon is experimenting with reduced hardware cost for Kindles subsidized by ads. I am not sure where the thresholds are in terms of whether or not ads can support free hardware, how this interacts with calling plans, etc. But this is definitely the way the low end of the consumer electronics market is going.