The majority of customers, I’d argue, see the iPhone a bit like this: the iPhone is a device with little-to-no up-front cost, with payment made for the services that provide value. That sounds familiar…
He’s specifically refuting the “people with $800 phones are complaining about a $3 app” arguments. I’d agree with him on this too. Consumers simply don’t see their iPhone as an expensive thing — it’s not (in that sense) a luxury item.
A cellphone is seen as a necessity by a great many of these consumers, and it’s a necessity that must be replaced (for whatever reason) with regularity. So it’s not a matter of the cost of the phone, but the cost of the phone relative to the other phone choices (keep in mind the “free” iPhone is still in play here). For many, there is no other choice than the iPhone, or the choice is close enough in price for it not to matter.
I’ll admit, I don’t “get” these people, but I never will. What I can understand though is the logic of not thinking an iPhone is as “luxury” as it truly is. With that in mind, the lack of willingness to buy $3 apps makes a fraction more sense to me.