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3G iPhone sales could reach 18 million this year

Analyst has high expectations for new Apple handset

Apple has priced the new iPhone 3G at the sweet spot of demand and will likely ship 18 million of the handsets this year, said an analyst that covers the contract manufacturer responsible for producing the device.

"The higher expectation on the 3G iPhone reflects attractive prices and a broader distribution channel (availability at ~70 countries)," wrote Jenny Lai, analyst at CLSA Emerging Markets, in a report. "The newly added white colour for the 3G iPhone also bodes well to consumers," she added.

Apple's pricing strategy follows the example of Motorola's original Razr, said Lai. Once the price of the Razr dropped to $200 near the end of 2005, sales of the device took off.

Apple's new iPhone is $199 for a version with 8GB of storage, and $299 for twice as much storage. The price squarely hits the sweet spot for consumers, said Lai.

She expects the new handset to be in short supply when it launches on 11 July due to a shortage of some key mechanical components, but those issues should be fixed by the end of that month.

Lai covers Apple's contract manufacturing partner for the iPhone, Hon Hai Precision Industry, the world's largest contract electronics manufacturer. iPhone sales could count for as much as 10 per cent of Hon Hai's revenue if volumes meet Lai's targets, she wrote.

Apple's 3G iPhone will be available in the UK for exactly the same price as it is in the US, with UK customers able to get their second-generation handset for free, or pay anything between £59 and £159 depending on the contract and spec.

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