The technological breakthrough that will allow such a cheap yet fully featured phone is the SC6821 chipset.
According to a press release, the SC6821 promises "a unique low memory configuration and high level of integration that dramatically reduces the total bill of materials required to develop low-end smartphones."
The as-yet-unnamed phone will run Firefox OS, so it may take some getting used to!
As we move to a no-contract world, you'll have to buy your own phone at a real unsubsidized price. $200 is the high point of what most people will pay. But most people are more comfortable under $100.
This coming Christmas, you'll see how entire market changes with super-cheap no-contract smartphones!