Apple slashes iPhone prices

In a move that will likely frustrate many of the first wave of buyers for Apples much-hyped iPhone, the vendor has cut the retail price of the 8Gb version of the handset by $200 to $399, and has discontinued the 4Gb model altogether.

The price cut can be interpreted in two ways. Either sales have been too slow and the cut is intended to boost uptake of the device, or the original price generated sufficient profit over two months that the firm can afford to slash the product’s margin ahead of the roll out of upgraded models.

US handset market analyst iSuppli leans more towards the latter version of events. The cut, iSuppli said, will allow Apple to maintain the smartphone market lead that it has established since the iPhone launched. “Although some have speculated the move comes in response to disappointing sales of the iPhone, iSuppli’s consumer research indicates that the iPhone outsold all competing smart-phone and feature-phone m odels in the US in July on an individual basis,” the firm said in a statement.

Apple’s move comes ahead of widely anticipated announcements of European operator partners for iPhone distribution. It is believed that Apple has signed deals with several major European mobile carriers that will see the operators kick back ten per cent of related service revenues to the electronics vendor.

There has been no indication of the retail cost of the iPhone in European markets, although it is unlikely that a version of the phone that lacks 3G capabilities – which is what Apple launched in the US – would fly in the UK, Germany or Italy, for example.

During the event where Apple front man Steve Jobs announced the iPhone price cut, he also unveiled a range of updated iPods, including a touch screen model with an onboard browser and a wifi connection that will allow users to buy content directly from the iPod.