In a not very good place, that's where. Olympus also confirmed the price: $500. This lens is competing with other 35mm lenses that, at times, cost less than half as much. Granted, many of these lenses are awful, but some are not, and Olympus needs to concern itself with those that are not.
Pekka Potka is one of the few to have an overview of the lenses characteristics posted, and he is whelmed. He says it's basically a wash in comparison to the 20mm, but is otherwise disappointed, closing with
Neither [the 17mm nor 20mm] gets nearly [as good as the 12-60mm] at any aperture nor with any fancy sharpening. This is why I will keep on using this zoom and hoping that some day Olympus will learn to make THE REAL 17mm prime lens. Still, I will buy this new 17mm lens because, after all, it is a step forward in my use for reasons illustrated.Well, that's a ringing endorsement.