Apple's new iPhone 3G sells out within hours of going online

The next generation iPhone hits the high street this week, but the rush to pre-order on the internet was enough to crash the website and sell out within just a few hours.

O2, the only mobile operator offering the iconic handset, saw peaks of 13,000 transactions per minute after opening online pre-registration at 8am on Monday. Despite several millions pounds of investment, and processing capacity boosted by 250 times, the site stalled as the 16Gb iPhone sold out by lunchtime and the 8Gb version soon after.

The iPhone 3G is available in shops from 8.02am on Friday, and the network operator is expecting another rush. Ronan Dunne, chief executive of O2 in the UK, said: "We've never seen any mobile device create the excitement and demand of the iPhone 3G. We'll be working with Apple to continually replenish our supplies throughout the summer."

The upgraded version offers faster speeds than its predecessor, as well as built in geographic positioning systems and upgraded software that can run hundreds of applications, not only those from Apple. But the most significant factor is likely to be price. For some high-tariff contracts the phone will be free; at the mid-range it is priced at between £59 and £159, depending on the model.

Caroline Milanesi, a research director at Gartner, said: "If you look at the total cost of ownership there has not been a big change, but the face value of the device price has come down a lot and that is crucial."