Due to the generous subsidies provided by the large mobile carriers like Verizon, Apple’s iPhone is available at lower prices as compared to Google’s Android phones. This is primarily because Apple has successfully negotiated with these companies as opposed to Google. Hence Apple has a cost advantage over its competitors allowing it to maintain its margins despite cut throat competition.
Since most users opting for Android phones are either looking for cheap, low end models or the higher specs and ‘upgrade-ability’ of the models, companies like Verizon can discriminate on prices with a simple strategy; for the former, they simply keep the low end Android models whereas for the latter, they know they can charge anything because those users are bent on buying an Android phone no matter the price.
Therefore, most high end Android phones despite being older and possibly less advance are still more expensive than Apple’s new iPhone 4S.