Fine print...
Note: this story is related only to phones used primarily for work, which the company has subsidised fully or almost fully as a legitimate business cost in the past. It has absolutely no bearing on the *personal* use of an iPhone (at work or otherwise), for which employees have never received any substantial discount or benefit.
Now, within the realm of business use: if this forces anyone to get a new phone, break a service agreement, or otherwise incur cost, all of that cost -should- be subsidized by the business (whether or not this is what will actually happen, I don't know). If this does turn out to be the case, then it's pretty dumb as a cost-cutting measure in the short-term -- the business will have to pick up the cost of replacement hardware, broken contracts, and possibly iPhone disposal. If it turns out not to be true, then it's a complete disincentive to keep a work phone -- if the company won't pick up the complete tab, and sticks the employees with the bill, why pay for the privilege of being "on call" all of the time *and* be stuck with hardware you don't want? I presume that the former silliness will pan out rather than the latter.
I would also theorize that MS might have ditched the iPhone, not because it's an Apple product, but rather because it's tied to AT&T exclusively. Note that a handset that can be used with any carrier is a very important negotiating tool when it comes to thousands of handsets. If MS can put the hardware on multiple carriers, then it has some leverage to twist their arms, play them off one another, and get better service pricing in the long-term. Given that only AT&T is the only carrier available for the iPhone, they can pretty much dictate their price.