Originally Posted by jswinden
The unlocked iPhone 16GB model sells for $649. If Apple sold this without a phone radio, it would still be for well over $500. I doubt any of us would pay between $500 and $600 for phoneless iPhone labelled as an iPod touch! I seriously doubt you could even find a used and working iPhone 4 or 4s for the price of an iPod touch (which currently sells for under $200). I'm guessing a used iPhone 4 or 4s will be at least twice the price of the touch. It is simply not worth that amount to be used as an iPod only.
It sells for that price because Apple gouges its customers.
iSuppli has the BOM + Mfg for the 16GB iPhone 4S at $196. Sell the 16GB for $249 and the 32GB for $299; and Apple still makes a tidy profit.