He's talking about cost of actually building the device. A big part of the iPhone's consumer price ($700 for 32gig) is markup, as he points out in comparing it to the price of the iPod touch, which is $300 for a comprable model.
In other words, he's claiming that Apple could undercut the A8181 Desire or the Galaxy S on price, but keeping the customer choose between "FREE* shiny new phone" or "$200* shiny new phone" reinforces the perception of Apple as a premium brand.
Uh, the iPad costs a lot more to build than $264.27: do the math on their earnings reports: Apple is hardly making any profit off of them. And the iPad has a screen 4x the size of the Galaxy S. You just can't compare the two...
Again, the author was the one that used the Galaxy S as a comparison, it's in the article. As for the figure, I gave the caveat that you have to believe the source, though I think the source is pretty well researched.
" as he points out in comparing it to the price of the iPod touch, which is $300 for a comprable model."
But the iPod touch has some corners cut. No anti-oil coating on the screen, for one. It also retains the former body shape, not the flat-glass-on-both-sides iPhone 4 style.
In other words, he's claiming that Apple could undercut the A8181 Desire or the Galaxy S on price, but keeping the customer choose between "FREE* shiny new phone" or "$200* shiny new phone" reinforces the perception of Apple as a premium brand.
* with 2 year contract