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The English have something to gloat about over their American friends, thanks to Apple's new iPhone cuts.

The price on the 8GB iPhone in Britain had been £269, or about $530 USD; more expensive than the U.S. version, which retails for $399 USD.  However, O2, the carrier for the iPhone in Britain, and Carphone Warehouse, Britain's largest mobile phone retailer, slashed prices on the low-end iPhone.  The new price is 169 £ or about $333 USD. 

The 16 GB model remains untouched at £329 ($649 USD), significantly more than the U.S. price of $499.  The price cut on the 8 GB iPhone lasts through June 1st, according to the retailers.

The iPhone is already O2's fastest selling device.  It hopes the new price cuts will create even more momentum for the iPhone, which seems to be doing quite well in Britain despite some sales slowdown. 

O2's most basic plans start at £35 a month, or about $69 USD.  Some analysts had predicted that slowdowns in the U.S. economy and abroad could put a dent in the handset market, particularly for high-end models like the iPhone.  Carphone's Finance Director Roger Taylor refutes such claims, saying the market for premium phones remains strong.

While some say that the cuts may be an attempt by O2 to spur sales of the iPhone, which have slowed since its release, other analysts say Apple and O2 may have ulterior motives.  They point out that the mark down may be a precursor to the release of Apple's new high speed model of the iPhone, which will support faster 3G networks.

Apple declined to comment on these rumors.  Astute observers will note that T-Mobile similarly cut the price for the low-end model in Germany.

CCS Insight analyst Ben Wood commented, "More and more this is starting to look like they want to clear stock of an older model, with a looming revision to the iPhone which will likely include 3G.  But also we think the iPhone has slowed down during the first quarter and we think this (a 3G launch) should give sales a bit of a lift."

O2, owned by Telefonica, and Carphone Warehouse received permission from Apple to carry the iPhone, but have been tight lipped about precise sales figures.  O2 would only say that the phone is its "fastest selling device".  An Apple spokeswoman did mention that the cuts were a "O2-led promotion" and that Apple's retail stores would not change their prices.

In the U.S. and abroad, the iPhone has sold well over 4 million units, although as many as 1 million of these iPhones may be unlocked, putting a dent in Apple's revenue.





"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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