I've seen quite a number of posts suggesting that due to the 50% drop in flash memory prices since Apple made the iPhone announcement, Apple should either double the memory in the iPhone to 8/16GB or drop the price or something. My theory is this:
This drop is not some sudden and unexpected development; it is the expected and predictable result in a multi-year drop in the price of flash memory. Ergo, Apple probably counted on flash memory prices to drop prior to the iPhone's production and based the prices on these expected lower market prices. Had there been no indication that flash prices were going to continue to fall, they would have put 2/4 GB in the iPhone, or set a higher price initially.
This drop is not some sudden and unexpected development; it is the expected and predictable result in a multi-year drop in the price of flash memory. Ergo, Apple probably counted on flash memory prices to drop prior to the iPhone's production and based the prices on these expected lower market prices. Had there been no indication that flash prices were going to continue to fall, they would have put 2/4 GB in the iPhone, or set a higher price initially.