I can't believe the people who are saying "it's overpriced because I just need a phone for talking." That's the same as saying "anything that costs more than a Kia Rio is overpriced because I just need a car for driving." Just because something is more than you are willing to pay, it doesn't mean it costs more than it should. I personally have no need for an iPhone, and don't care for my phones to have anything more than the ability to make and receive calls, but I understand that what I want isn't necessarily what others want.
I'm going to beat the dead horse a bit and say that retail products cost much more than the components to manufacture them. I have a really good chocolate chip cookie recipe, and I recently decided I might try to sell some cookies. I calculated that it would cost me $1.49 in ingredients to make a dozen cookies, but if I sold them at that price, I'd be losing a lot of money. If I want to pay myself for the labor to make them, I'd have to raise the price to $3.49 (and that's only $12 an hour - nothing ridiculous). Someone might see my price and say "that's crazy. It shouldn't cost more than $2 a dozen if it only costs $1.50 to make," but if I charged that, I'd only be paying myself $3 an hour! It's the same for Apple. They have to pay the employees, cover the costs of any materials used in development, and new hardware/machines they had to buy in order to develop it, and pay power bills, etc.
btw, after figuring out how much I'd have to sell the cookies for, I've decided I probably won't bother doing it. lol