I couldn't find the first article I had read spreading the Android vs. iPhone competition meme. No matter, it has taken root and grown like ivy. iPhone doesn't compete with feature phones or smartphones, but with Android, yada yada. Where's Microsoft and RIM, yada yada. iPhone is closed, Android is open...
Hold that last part just a sec.
It is true that by the standards of the software world, iPhone is less "open" than Android -- Android will run on lots of hardware, it is open to programming at more layers of the stack, doesn't involve an App Store or a pseudo-proprietary language. iPhone is more constrained.
It's shaping up to be an epic battle if you accept that framing of the story... But:
By the standards of the wireless telco world, both iPhone and Android are "open" (as are Symbian and Windows Mobile) because they let you choose what you want to run, and by exposing services like GPS location and push messaging to ISVs, they allow a freeform relationship between the device owner and the software vendors offering real, fast-paced innovation. Such a relationship is a huge change from tradition, where the telco mediates the relationship to the detriment of everyone involved.
Never mind if the data access costs a bit more than some folks might like (Gizmodo shows that there isn't really any change here from existing smartphone plans). The carrier has to make money somehow, and building wireless infrastructure and selling access to it is what they're good at. Controlling the user experience is not what they're good at (one reason they rank slightly below used car salesmen and vampires in terms of customer satisfaction).
Looked at this way, iPhone and Android have a whole lot in common: they're trying to push the evolution of consumer use of mobile devices while trying to wrest control of the narrative from telcos who have stifled the industry for almost a decade.
The hype and success of iPhone and Android is a boon for consumers and for the entire industry, a chance for America to move from a cellular Minitel world to an Internet world.