> As the US (and the world) moves more to a non-subsidy model I think this disproportionately impacts the iPhone.
This is the exact model Apple's computer division deals with, and they're wildly profitable compared to most PC vendors even though they charge premium prices all around. What's different about phones?
The computer division is funded by the overall success of Apple. It allows the computer division to have a bigger budget to spend on things like marketing and R&D. It's not a coincidence that the computer division has been doing so much better since Apple had other mega-successes that serve as the cash cow for the entire company.
If the iPhone ever ceases to be as profitable it will have a ripple-effect throughout the entire company as they scramble to find the next thing that will replace those lost profits.
Actually, Apple spends remarkably little on R&D, perhaps even to a fault. The third chart on this page from Asymco [1] is interesting, especially considering Apple's R&D is for computers, phones, and whatever other lines they're developing, and the R&D for a company like HTC is likely to be clustered around its narrower product lines.
This is the exact model Apple's computer division deals with, and they're wildly profitable compared to most PC vendors even though they charge premium prices all around. What's different about phones?