Aggressive Android device pricing a threat to iDevices?

Looks like the hawkers of Android wares, Amazon among them, are starting to compete aggressively on price. Amazon is selling the Samsung Captivate for $0.01 with a 2 year contract. A penny buys you a phone with some pretty beefy hardware, including 1GHz processor, 4 inch screen, and 5 megapixel camera that make it very competitive with the iPhone 4. Many previous-generation handsets, like the Motorola Droid on Verizon, are also free with 2 year contract.  Will Apple continue innovating in software experience and user interfaces fast enough to combat this threat, or will being 1/10000 of the price of the cheapest iPhone be enough to win over customers?

Post a response / What do you think?