Cut corners with the pixel density, and capacitive touch grid density. Plus you can use the same (or similar) processor as the phones. An iPhone 4 costs so much because it is an engineering miracle that so many components can be fitted into such a small volume. Manufacturing costs also scale with the number of individual physical components used.
Originally Posted by curaga
Yes, thank you. But not realy.
Originally Posted by bobwya
The real costs lie with developping/employing the latest and greatest in the small size. You see old tech like LCD in a large size with less pixel density is cheap because it's so widely deployed and has been deloyed for a long time.
Things go from desktop size (servers) and shrinking down to desktops and then laptops and once certain tech is used on phones (for example) it's so new that it will cost a LOT.
BTW the iPhone is not only expensive because of that, but also because Apple pays for factory upgrades in exchange for having the exclusive right to obtain that new tech. So others can't approach these large manufacturors and Apple needs to somehow get that large amount of money back. So Apple charges extra for their smartphones, while being not that expensive to produce (strip a wire and you have an iPod touch without call functionality).