Why does Apple charge so much for its iPhones?

The short answer for why Apple charges so much for its iPhones -- e.g. $549 for the new iPhone 5C that most analysts expected would sell for somewhere between $300 and $400 -- is that it can. "Anybody would if they could," writes Horace Dediu on his Asmyco blog. "The right question should be: why does anybody pay this much?" The operators who pay Apple's steep prices do so because the iPhone helps move users to higher revenue data services. Dediu reaches this overall conclusion in his analysis: “The iPhone could thus be finally understood as a complex service business. It captures value through the phone bill but delivers value through a screen…. It's essentially tapping into the $1.3 trillion communications market, skimming profits by delivering the 'content' which lights up the wires. It's great except it does not work everywhere. Not yet at least. The complexity of services means that they are usually found in more advanced so-called service economies and rare in less developed so-called goods economies."