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Cost has nothing to do with price. It's all about customer perception and their willingness to pay. Handbags cost very little to make, but some are priced at $800 and some are $8.

16GB more on an iphone 5 is $100 more in price. That is the choice given to the customer.

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My point is that knowing Amazon's business model, It's surprising they are openly playing the margin game on this device and bleeding the buyer vs. recouping that $100 in Amazon purchases.

I think it's much more likely that Amazon chose this price so that users didn't think it was a piece of junk.

Users are used to paying 600 for a phone. A 100 dollar Android phone works like shit. Add to that, if they priced it well below market value, then third parties would come in, buy up all the phones and stick them on ebay.

Right. They want the perception of it to be a best in class smartphone.

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