Apple's long-awaited iPhone arrives in Britain

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For many gadget geeks it is the most exciting piece of technology yet to emerge from Apple. Less than three months after its release in America prompted a flurry of sales and spread panic among competitors, and less than a fortnight after the launch of the sixth-generation iPod Touch, the iPhone is launched in Britain today.

Steve Jobs, Apple's founder and CEO, has announced that Apple's first mobile telephone will be distributed on the O2 network at branches of The Carphone Warehouse nationwide. The iPhone, with its video-messaging, wi-fi connectivity and touch-screen features, was first released in the US on 29 June and soon became the most talked-about handset in the world, selling more than a million units in its first two months.

The phone has all the standard functions of mobile technology currently available in the UK, but also includes the unique features of Apple's iPod, a digital music player. It can play music downloaded from the internet, has an in-built camera, can play television shows and films, and allows users to browse the internet and check email.

Today's launch is part of a concerted attempt by Apple to break into the European mobile phone market. The iPhone, which will also be sold by Orange in France and T-Mobile in Germany, is expected to go on sale almost immediately, and industry experts predict that it will be priced initially at £269 ($399), the same as the iPod Touch is being sold for on Amazon. More than 270,000 were sold in the first 30 hours of its release in America, where some Apple fanatics queued for more than five days in anticipation. Not all were pleased, however, by a price cut that sees the 8GB machine on sale at a huge reduction on the initial price of $599. After widely publicised online protests threatened to damage Apple's reputation, Mr Jobs wrote an open letter to customers, offering a $100 rebate to those who had paid the higher price.

There was some speculation yesterday that O2 had paid too high a price for exclusive rights to the franchise in Britain, with rumours that they would be forced to give Apple up to 40 per cent of revenues from use of the iPhone and an agreed margin on the retail price. Apple is thought to have demanded that the iPhone be sold through The Carphone Warehouse because of fears that O2 did not have a sufficiently large presence in the UK.

A further source of concern for O2 will be the release on 5 September of the iPod Touch. The sixth generation of the iPod will be available in the UK before Christmas, and some experts are warning that the similarities between it and the iPhone will dampen demand for the new product. The two machines both have touch-screen and wi-fi capabilities, and are almost identical in size.

Vodafone had been expected to win exclusive rights to market the iPhone, but O2 poached the business at the last minute. The deal was finally secured after Mr Jobs received a visit from Cesar Alierta, the boss of Telefonica, which bought O2 two years ago.