It seems that Samsung is following the same market strategy now...
The newcomer Galaxy S10+ is going to be priced 900£/1100£/1400£ with 128GB/512GB/1TB storage

Samsung just announced their new folding phone would cost about $2000 US.

Development costs also go into the price of a product and cramming lots of stuff in a small box isnt easy. There is also some psychological aspects to pricing a product but I'm sure there is high profit margin.

Personally, I feel there's 3 factors

1. The incredible cost of their research which has to have engineers thrown at every area. Engineers know how to spend!
2. The huge investment in wafer fab. Samsung has 7nm wafer fab, so good that AMD are now getting an edge on intel by contracting out manufacturing to Samsung.
3. They're also taking the <expletive deleted> and laughing all the way to the bank

There's also 20-30% for the sales point, in this country 23.5% VAT, maybe import duties, or whatever. Wholesalers get a smaller % cut, but everyone has to be covered for 'shrinkage' (= the accountant's word for theft). Returns are also high in this area.

Personally, I had a Note 2 and only updated because I needed a later OS. I now have an S7 Edge, and don't foresee updating. Buy 1-2 year old models, and they'll be talking sense on prices.

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this.
the market is so saturated with "last year's favorite" and/or pre-owned models, you can usually get a one-year-old model in perfect condition for a fraction (significantly less than half) of the new price.

i don't know what people have against buying used, but for me that has been the best option, consistently.
my most recent oneplus 3 cost 100€ last year, and I sold my old phone for 40€.
say i repeat the process every other year or so, means i spend ~30€/year on mobile phones.
I have done this for 2 decades now and never had a bad egg.

looking at the ads, the prices, i can only shake my head. people are crazy, and it's considered normal.

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What amazes me is that they keep jacking up the prices and people willing pay them to get into the "walled garden" (I like that metaphor Reziac!). Once you are IN the walled garden, they make it difficult to get out. The thing is, the technology from one phone generation to another isn't that different. Marketing folks make it seem like the previous phone was a brick and the new one HAL from 2001, but there might only be slight differences in camera quality, etc.

I am being a bit of a hypocrite because I have a $900 Samsung Note 8 but I tend to keep phones for a long time and I use the heck out of the smart features. At least I don't have to operate in a walled garden though - I only use my Google account to manage the software on the phone: all other services are through providers other than Google.

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Good policy, IMO. Of course I also build frankenputers from salvage, so I think this is normal.

I've accumulated a few random very old cellphones in my Curiosities Box, and every one of 'em works, some better than newer models (or would, if GSM was useful here). The oldest is a Nokia that's so old it's ANALOG (IIRC made in 1998), and it not only still works, and picks up a signal (tho can't use it), the original battery still holds a charge!

I'd really like to find one of those flip/smart hybrids... shoulda grabbed one when Ting had refurbs for under $50.

My wife has just parted with her vintage 1993 Nokia mobile, because the replacement battery no longer holds a charge. She's a technophobic lady (married to a nerd.

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May I interject?
Just an accounting liberal art procedures. The R & D on that folding phone was probably astronomical. R & D cannot be capitalized. It has be be expensed out as it occurs. (Loaded out a lot of money, no returns yet). The projected price is use for future returns. It’s all included in the rule of Capitalism.
Don’t pay any attention to Samsung’s marketing tactics. It’s not done for you, it’s done for the IRS.
Tap on the shoulder.
Bye
Denise

One thing comes to mind about continued use of these "old" smart phones is OS updates (critical security updates). Some vendors including Google (for it's pixel line), will not provide updates after some time. Yes, a way around is to root/jailbreak and download/apply updates manually. But, I feel like most users are not going to do that.

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If withholding updates is being used to coerce expensive 'upgrades', I'm not playing that game.

If I'm just using it as a PHONE, I don't care. The most anyone can grab from it is a contact list, not terribly useful as it's all public info anyway. And if you dial all the numbers, well, the one with a bogus name is the cops.

I got caught by updates. In the past, I had rooted a phone and installed Cyanogenmod. Samsung apparently prepared Android-5.0 for my Note 2, but it failed internal tests and was never released. I had Android-4.4.2, and needed ≤Android-5.0 for an Epilepsy Monitor. I couldn't update it myself, as I've had a stroke and can't do stuff like I did. The places that would root it for me were distinctly dodgy; I couldn't reach them, and I had an unexpected windfall, so I updated. Rooting and installing Android is no use: you're left without drivers, firmware, etc. You need something for YOUR phone - from Samsung, or a Mod. CyanogenMod is gone. I think the other guy doing Mods back in the 'nineties was called Jesus Freak, but he didn't last either.

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Very true about the drivers; and with Samsung, they have so many variants of same models that drivers on one are not compatible with others.

Have you tried or looked at LineageOS: https://download.lineageos.org/

https://www.lineageos.org/

iPhones do not cost "$38" to make. The older models had a bill of materials between $200-250. The iPhone X has a BoM of $370 and up. Add to that assembly, packaging, marketing, and inventory costs, plus the high costs of the retail stores, and it starts to make some sense. Do they have a huge markup? Sure. Are people willing to pay it? Enough to keep them profitable...which is the whole point. Does a $1000 dollar phone contain $1000 dollars of value? If you say no, then does a $10,000 Rolex contain $10,000 of value? All it does is tell time...yet people still pay for them. Does a $350,000 dollar Ferrari actually contain $350,000 of value? Not by any metric I would apply, yet they seem to sell quite a few.

Android didn't exist in the '90s, don't know what you're talking about. Cyanogen is gone because nobody made a nickel doing it. Each firmware build required someone willing to work (for free) on getting all the devices to work correctly, and doing extensive testing. After a while that gets to be a drag. People have lives to live, they're not willing to spend years working for free on software that only a few people will ever use. Many devices never had and never will have a option like Cyanogen or Lineage, because they use devices that do not have drivers, or they are not publicly documented. Once again, no financial incentive. Most Android devices will get maybe one OS update, or none at all. My Motorola phone which was new last year, and got Android 8, will apparently not get Android 9. The kernel is version 3.18. How damn old is that, anyway? It's not even supported any more. Companies like Motorola and Samsung get away with this because most people don't care, and just want a new phone anyway.

My first rooted phone was the version of the G1 we got over here. That got Cyanogenmod. I don't know where I mentioned the 90s, but I don't think I said Android was out in the 90s.

Agree with you 100% on Open Source, and Cyanogenmod. The wonder is that any of these guys survive. Open Source is a totally impractical business model - make a product, pay for a website to give it away on.

Kernel-3.18.1 was around the end of 2014. As for phone upgrades, It varies with the phone. My Note 2 came with Android-4.4.2, upgraded to 4.4.2, and they failed to upgrade it to 5.0, which came with some useful bluetooth features. My S7 Edge came with Android-6.x, upgraded to 7.x, then 8.x, and will probably go on with less urgency until they hit a roadblock, at which stage they stop. It's a 'more expensive' type of phone as opposed to their 'yellowpack' S7.

Android developers seem very fond of the 3.x kernel series for some reason. I presume they backport patches. Maybe if we started Arm devel we'd figure it out.