Matt Cutts has just said at Pubcon that subdomains will be treated as subfolders of the primary domain in an algo change in the next few weeks. So, if you are like me and utilize subdomains to take out a large portion of page one it's time for a change in strategy. I've managed to get 6 front page listings from the one site, however the most you will get after the change is 2. It will be interesting to see how sites like Wordpress with their hosted blogs (username.wordpress.com) or About.com etc fare after the change. Your thoughts?
I couldn't possibly work for those sites - you'd have thousands of subfolders for the main subdomain Wordpress, all with no relation to the parent site other than the software script they use.
Id say ebay will feel this too. They are the kings of subdomains and dominate about 3 pages if you search for their name on Google.
It's not known how Pagerank will be effected or if it will be effected. Because if subdomains were treated as subfolders in every way, it will change the flow of Pagerank somewhat. Also it won't be "impossible" to get more than 2 URL's from the one domain/subdomain to return for a query in the SERP's but nearly impossible. Maybe we will see more sites being awarded sitelinks if they have multiple URL's under the old system. Hopefully the video will be online soon.