Apple 2.0

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iPhone price cut 37% in U.K. as Apple clears way for 3G model

April 16, 2008: 5:51 AM ET

Two weeks after T-Mobile slashed the price of the 8 GB iPhone in Germany, Britain's Carphone Warehouse and 02 on Wednesday knocked 100 pounds of the price of the device in England, a 37% reduction. The iPhone that sells in the U.S. for $399 now costs (including VAT) $330 in the U.K. and $155 in Germany. Both promotions will end in June.

Meanwhile, U.S. supplies of the iPhone remain tight. Piper Jaffray analyst Gene Munster called 60 Apple stores over the past two weeks and found shortages across the board. Half the stores he checked on Tuesday were out of 16GB iPhones and 82% had limited supplies of the 8GB model.

Munster concludes from the price cuts in Europe that demand for the iPhone there is "light" and that Apple's partners are "draining the channel" ahead of a new iPhone. He believes that the tight supplies in the U.S. indicate that Apple (AAPL) is likely "pacing its remaining supply of phones by trickling units into its retail channel until the new model is released."

Both signs, he writes in a report to clients, point to the June release of a redesigned iPhone with 3G connectivity to coincide with 1) the World Wide Developers Conference that starts June 9, 2) the late-June release of the new operating system and third-party applications, and 3) the end of the European iPhone sale promotions.

Munster speculates that the price of the entry level iPhone will likely remain in the $349 to $399 range. He says iPhone sales probably won't really take off until 2009, when cheaper iPhones become available. Specifically, he expects Apple to introduce an iPhone that costs between $200 and $300 in early 2009, probably at Macworld in January. With cheaper phones and further expansion into Europe and Asia, he's looking for Apple to sell 45 million iPhones in 2009. See here.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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