O2 slashes £100 off iPhone price

The price of Apple's UK iPhone has been slashed by mobile operator O2 - fuelling speculation a 3G version will be launched this summer.

The 8GB iPhone can now be bought for £169 until 1 June 2008 - reduced from £269 - on O2's 18-month contract, which includes data browsing and free access to The Cloud's 7,500 wi-fi hotspots. The offer is subject to stock availability.

The price cut means the 8GB iPhone is now cheaper than the 8GB iPod Touch, which sells in the UK for £199.

The 16GB iPhone remains priced at £329.

The price cut will also fuel speculation that O2 is trying to shift stock before the much-rumoured launch of a 3G version of the iPhone in June.

Both Apple and O2 remain tight-lipped on the 3G iPhone speculation but analysts at the Bank of America predict Apple will launch the high-speed wireless version of the device in the second quarter of this year and produce up to eight million handsets in the third quarter.

O2 maintains the iPhone has been key to attracting new high value customers, with 60 per cent of iPhone customers new to O2 and 30 per cent of iPhone customers spending on average 30 per cent more than others on pay monthly tariffs.