> All phones cost that much.
Let me start by saying I agree with your point about pointing out the cost of taking the "subsidy". Personally that's part of my reason for the phones I've had the last couple of years. I figured that the subsidy in fact is costing me enough that if I opt for slightly cheaper models (see below), I can, if I want to, easily justify upgrading once a year instead of once every 18-24 months as is typical for the contracts here, and given my propensity for having phones slip out of my hands and end up shattering on the floor on the other side of the room, I figured that'd be a good idea...
But going to $600 for a smartphone is not at all necessary these days unless you "must" have the very latest and greatest. For those of us willing to put up with last years performance, you can get great quad core phones with full hd (1920x1080) screens based on MTK or Rockchip CPU's for well under half that.
I swore off the flagship phones a year ago - the tier down and cheap Chinese knockoffs that do lag behind performance wise but are otherwise fantastic, are "fast enough" now that I just don't have any need for anything faster.
My latest unsubsidised phone is an iOcean X7. With an extra 3000mAh battery it cost me ca $250 for the 32GB version (internal, also supports 32GB micro SD) including paying extra to get it shipped from China in 5 days (many of these models you can also find on Amazon Marketplace from a variety of importers if uncomfortable with ordering direct). It's a fantastic phone, with just a couple of minor caveats (the GPS is shit on a number of the Chinese phones - it's a known chipset problem coupled with bad antenna design; for this model there's a known easy non-invasive fix).
I'm unlikely to consider a phone above $300 again anytime soon...