IPhone to go down by £100

The cost of Apple's iPhone handset is being cut to attract new customers.

The mobile phone operator O2 and retailer Carphone Warehouse are cutting the price of the standard handset by £100 to £169, in what O2 says will make the phone an "unbeatable proposition".

The offer for the 8GB model lasts until 1 June only, while the price of the more advanced 16GB handset remains unchanged at £329.

O2, which is the exclusive network contract holder, says the iPhone, launched last November, is its fastest-selling handset. However, some experts believe the price cut reflects a slowdown in sales.

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

The price cut follows a similar move in Germany, where T-Mobile reduced the retail price of the 8GB version to as little as €99 (£78).