This average price includes many low cost phones mixed in with Nokia smartphones that sell at a higher price point.

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Be it pig roasts or text messages, you still have to make or sell something enough people want at a price that exceeds the cost of making or selling it to them.

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Tim is skeptical that a high-cost, high-tech Apple TV will sell at a premium price point, as some analysts are suggesting.

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"If we sell it at high moisture, then they deduct the price because of the cost of drying it down, " Schmidt said.

CNN: STORY HIGHLIGHTS