Mostly the law. Selling products compared to renting out products has a very different form of liability and risks. I am not a lawyer, and all that but...

If you buy a car, the seller of said car only has a very limited liability in case of faults. If the car breaks down, its up to the owner to fix it. However, if you rented a car, safety and repairs are on the company that rents the car out. This is how things worked until the 21th century

Selling or renting a product was supposed to be a trade off between liability and ownership. Companies made a choice, depending on risks/reward and if they wanted to effectively become a service company. With DRM however, liability is gone because the company do not claim property ownership, thus any product can now become a effectively rented product and never leave the control of the company.

I have no problem with a company that rents out products. I do however have a problem with companies that is exempted from liability while effectively renting out products under the pretense of selling products.

Renting doesn't always protect the renter from liability for a defective car. Often times, the renting agency has the renter sign away rights. What can you do about that? Go to a different agency. Oh wait, they all do that.

Did you sign an agreement when you purchased the hardware stating such? If it's the EULA, can you just not read/agree to it before you modify the phone? Also, EULA may be a contract but it's not law.

Contracts can require you to agree to things that are otherwise illegal for them to do. IANAL, but to give an extreme example, Motorola can't ask you to rob a bank in exchange for the ability to purchase a device. There are things such as the First Sale Doctrine (not necessarily applicable here, but still) that dictate limitations that a seller of a copy written entity (copyrights on a physical object, sigh). Such things could maybe render parts of a EULA moot depending on local laws. Again, IANAL.

There wasn't a licensing agreement presented and agreed to when the device was purchased.

In my experience, there actually is. Sadly, I think most people don't even read this, and even those that do (me) accept its unreasonable terms because they just need the device already and aren't finding free (libre) alternatives quickly.

I wonder if paying Sales Tax makes it a sale of device instead of right-to-use license.

Hmm ... when you explicitly and specifically pay for a license, is there sales tax? Like, seats for enterprise software?

I know I paid sales tax in California on a car rental.

I haven't ever heard of that as a preclusion.