Page last updated at 16:49 GMT, Tuesday, 15 April 2008 17:49 UK

Price cut knocks 100 off iPhone

Woman walking past advert for the iPhone in London
The price cut follows a similar move in Germany

O2 and Carphone Warehouse are reducing the retail price of the standard iPhone handset by 100 to 169 in an effort to attract new customers.

The offer for the Apple 8GB model is for a limited period only until 1 June, and the price of the higher capacity 16GB handset remains unchanged at 329.

O2 said the discount would make the phone an "unbeatable proposition".

Some experts believe the price cut, following a similar move in Germany, reflects the model's slowing sales.

The BBC's technology correspondent Rory Cellan-Jones said the price cut was a surprise and begged questions about how well the phone was currently performing.

'Broader appeal'

Since its UK debut in November O2, which has the exclusive UK network contract for the phone, says the iPhone has been its fastest selling handset.

The offer will be available to all iPhone users irrespective of what price plan they choose.

The iPhone has been very successful but we want to expand it even further
O2 spokesman

O2 reduced some of its iPhone tariffs in February while giving customers on its basic monthly 35 plan three times as many texts and minutes.

"The iPhone has been very successful but we want to expand it even further and price is a very good way to do that," an O2 spokesman said of the move.

Carphone Warehouse said the offer would "broaden the phone's appeal".

O2 said Apple was "aware" of the offer while Apple confirmed its own London store would not be introducing similar price cuts.

The move follows a recent price cut in Germany where T-Mobile, iPhone's exclusive network operator there, slashed the price of the 8GB version to as little as 99 euros (78).

New strategy?

Many analysts believe the price cuts are a sign that Apple has either been forced to change its European distribution strategy following the introduction of the 16GB model or is anticipating the launch of a 3G version later this year.

"CCS Insight believes sales of the iPhone have slowed significantly in all the European markets where it is available," research firm CCS Insight said.

"It is something Apple will need to overcome if it is to reach its target of selling 10 million iPhones by the end of 2008."

So far Apple has exceeded its targets for the iPhone, first launched last June.

It shifted one million handsets by September and 2.3 million phones in the three months to the end of December.




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