As you said, most contracts basically absorb the price of the phone. Hence it is doubly idiotic to go out and purchase an $800 one that isn't covered by such a deal. If you're in a lurch, you can buy an $80 phone- even a $100 dollar phone; or a $20 used phone that has the $800 phone's most important function- the fact that you can use it to call people.
They are all phones. No one needs $720 worth of bells and whistles on their ****ing phone. You mainly use the thing to call and text. It's a ****ing cell phone.
You obviously know nothing about the actual phone, or smartphones in general. I totally agree 800 dollars is outrageous, but this type of phone is more than just something you call and text on.
Let's say you're on a plan for a year, and you decide you wanna upgrade your phone. The only way you'll be able to do this is go out and purchase a retail priced phone. Now you're certainly right in that you can purchase a basic for for "cheap" compared to this, however, that's generally not what someone does when they *upgrade.*
Let's just say your contract is up, but you wanna upgrade your phone. The only way to do this without locking yourself back into a contract is to pay retail. Not only that, but paying for the phone outright instead of locking yourself into a contract is actually cheaper (most plans run you 1,000+ dollars for a 2 year contract). So someone can upgrade without locking themselves into a 1,000+ agreement with a carrier.
Of course, most of this is moot considering how there's no easy way to swap carriers without starting a new contract and that most carriers can't use the same equipment as each other. So the 800 dollar price tag is insane, but it's retail and keeps you from locking into a plan.
Let me break this down for you. You basically said "but the cheap phones are kinda expensive too if you go and buy them without a plan." But the point here is that this thing is not offered in such a way. The price of a phone that one can get free or cheap-as-free with a plan is (as you agreed) exactly what you pay for it. Not the theoretical retail price. No more. No less. This one just costs about $800 dollars more.
Like I explained above about the cost of a plan, you really are paying more for a phone than you think. If it was possible to just buy a phone at retail price and start a plan with no contract it would be much cheaper than starting a contract based plan and getting a free/cheap phone. Things aren't as cut and dry as this phone is "cheap and this phone is expensive." But I'm sure you already knew that...