iPhone buyers aren’t going to break their contracts and buy this lower-end phone.  We all know that.  But as the iPhone market goes down-market to build its customer base, cheaper Android phones are going to be a major hurdle.  Why buy the $200 iPhone with 2-year contract and $110/month plan when you can get an Android phone for a fraction of that price (especially if the Android plan includes unlimited data)?  Apple is a one-phone, one-carrier operation.  LG is planning to release 20 Android handsets this year.  There are already Android phones on every major carrier.  This is what Apple is up against.  They can’t win.

It’s the Windows battle all over again.  Apple can win the first few clashes as the fight begins, but once the swarm starts, there’s no way for the closed system to triumph.  The iPhone was able to beat the G1, but it’s got no chance against the Incredible, EVO, Droid, Nexus One, i1, MyTouch, Zio, etc.  The iPhone era is ending.  Retina display isn’t going to save it.

• A prepaid phone.  I don’t spend much time chatting it up, so I don’t have a need for a monthly plan.  I send a few texts each month, and my phone can handle that.  In the last year, I’ve paid close to $8 per month for cell phone service.
• An iPod Touch.  I needed an mp3 player for a road trip so I sprung for the Touch.  Now I have apps and emails and pretty badass mobile browsing.  And there are no monthly fees associated with its WiFi.
• Skype … with my mom.  I set her up and now we video chat to keep in touch.  I also have the Skype app on my iPod Touch, but I tend to only use it on my laptop.
• A land line … which I may ditch.  I’m looking into dropping my land line.  Skype has $3 per month calling to the US.  You just have to make the calls from your computer.  But since I have the land line, I use…
• Google Voice for all long distance calls.  And it transcribes my voicemail very entertainingly.  And it rings my office, home, and cell phone when people call.  It’s great.

All this seems like a lot of work, but it just isn’t.  It’s like Facebook and IM and email — I use different communication mediums to communicate with different groups of people.  BUT if Boost Mobile offers a prepaid Google Android phone, I’ll be the first to buy it.  And as Google Voice grows and allows VoIP calls, I’ll have less use for Skype and my land line.

So the cheapest iPhone ever is: iPod Touch + prepaid phone + Skype and Google Voice.  Which just leaves the camera.  Luckily, I married a photographer.