iPhone 4S 16 GB costs US$196 to build

Why do these never take into account, cost of development? Yea sure you can purchase those materials for that much, but it costs how much for all the people who go towards making it. How about the amount per phone iOS costs to make.

Cost of components is only a fraction of the total cost of the product. There's research and development, marketing, engineering, assembly, shipping, and not to mention the thousands of man-hours spend on developing the software that powers it.

How you price your product deeply depends on what your goals are. Apple derives its revenue from its hardware products, so it needs to maintain as high a margin as it can per device. Other companies, like Amazon, are able to sell high quality tablets at cost of $199 because they consider it a service rather than a product - they make their money back on the increased sale of services and content for the device.

I think Apple payed a bit more than that for Siri.

Hmm... I wonder why Apple doesn't wait until the rush dies down and sell these for $400 or so sans contract? They would sell millions more.

I've said this elsewhere:

That was a really nice article, but leaves a few unanswered questions. First, where are the cost estimates for the components found? Second, where is the build cost found. Third, what about costs of shipping, packaging, etc. And perhaps most importantly, where are the "real' costs? By "real" costs I mean, inter alia, the following: R&D, advertising, allocable share of Apple's overhead (rent, employees, etc.) and other "indirect" costs.
If those costs all were properly added together, my bet is that the real "cost" to Apple for each iPhone is significantly higher. Now don't get me wrong - I realize that Apple still has a very healthy profit margin. But tearing down the phone and estimating the cost of its parts is akin to valuing a human based solely upon its physical composition (ok, maybe that was a bit extreme).
The point is that the iPhones cost a great deal more than shown, and that the cost to the carriers is significantly higher as Apple must make its healthy profit. The carrier subsidies to consumers are quite significant, demonstrating the value of those customer contracts.
So in all, a nice piece, but an incomplete picture.

do these numbers factor in the fact that Apple buys in super bulk?

So even at the "subsidized" price they are making a profit, even more with the 32 GB and 64GB versions...
But there's probably more to it than that, like, shipping, for instance. I mean, they are made halfway across the world.