That's the most ridiculous piece of garbage journalism I've seen in a long time!
They're comparing the manufacturing cost to a theoretical $199 purchase price which is only available on contracts which subsidise the cost of the phone. What that figure has to do with the real, non-subsidised, outright purchase price of an iPhone is beyond me

EDIT: Just been reading all the vitriol that was posted in the comments back when this article was first published. Just confirms what a complete joke Gizmodo is and that they employ clueless morons to write their articles.
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