AT&T/Apple should price the iphone as low as possible. I think they have the ability to dominate the market like they do with the ipod. That would be unimaginable for Apple/AT&T.
The question is, dominate what market ?
Obviously we're just talking about the touchscreen tablet-style market, leaving out the millions who prefer keyboards or at least hardware cursors / iPod controls, or flip phones.
Also have to leave out those who want/need apps like Sling, navigation, MMS, etc... right now, not just in fantasies.
But most of all, with only certain carriers. In the US, just ATT, which leaves out about 2/3 of US cell customers. Furthermore, ATT's limited home footprint means that people in about 1/3 of the states can't own an iPhone, even if they wanted to switch carriers.
So, basically less than one third of the US. Hardly domination.
The phones that have more potential customers are the HTC Diamond series, with the choice of keyboard or not. Everyone from ATT to Sprint to Verizon are going to be selling them. Apple's ATT exclusive has helped HTC enormously.