It seems to me that phones are waay too expensive for what you get and relative to other items competing for our hard-earned dollars. How is it worth $500 - $700 for a top-end phone when you can get a perfectly serviceable smaller smartphone for $120?
A recent article in Time magazine revealed that only a small portion of the cost is for manufacturing and most of the cost is profit to the brand. This seems beyond what they reasonably need after their R&D and other costs are recovered. There doesn't appear to be any real competition to bring the cost down either.
Do people not have better uses for the extra $400? What kind of a flatscreen TV can you get for $400, for example, these days. The carriers have upsold us by lending us the cost and burying it in the monthly cost of a 2 or 3 year plan. The true cost of the phone is not seen as both costs are blended together.
Most people are under the impression that their phones are somehow "free" and the carriers do not disabuse us of this notion. People become Outraged if the carrier's credit check comes back negative and they are denied the loan. Entitlement to unlimited debt is considered a god-given right.
North Americans have become addicted to buying things we can't afford, and that's why we're in the trouble we're in now!
(And good luck, Mr Obama - we're rooting for you!)
Here's the Wikipedia list of Canadian Mobile Phone Carriers
A lot of the cost is R&D and patents. You have to pay a lot of people for patents on wifi, mobile networking, etc