"Nimble" pricing on the iPad is baked into Apple's initial $499-$829 cost matrix of the iPad according to Credit Suisse analyst, Bill Shope, who met with Apple executives (via the WSJ) last week.
Apple seemed to indicate it would respond with price cuts if demand for the device wasn’t revving up the way it liked. “While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated),”
The iPhone was originally introduced at a $599 price point and was subsequently dropped to $399 after a few months. The price drop was met with some negative reaction from early adopters.
Shope also notes that cannibalization of other Apple products is being minimized by "segmentation of capabilities"
