I think another thing the iPhone 2 will do is raise the bar for competitors to lower the price of their phones.

Like the iPhone did with version 1 in bringing in the slew of high-end touchscreen phones (iPhone was the not the first in fact, but the most effective player), I think iPhone 2 will now help in bringing prices down for all such touchscreen and high-end to mid-level phones.

I don't think the iPhone 1 was subsidised by At&T though. It cost the same with or without the contract. Wonder what is the case with iPhone 2...