Ever since the iPhone was launched it has enjoyed something of an elevated position in the UK market place with a large pricing premium present since day one. However, O2 and Carphone Warehouse have announced plans to cut the cost of the phone by a substantial £100 in the hope that more users will be attracted. So will the plan work?

As in any economic slowdown it is always the so-called luxury goods which are the first to feel the pinch and they don’t come more luxurious than the iPhone! The price reduction of some £100 represents a saving of over 30% from the current price and is being seen by many as a desperate move, but is this really the case? Is the iPhone phenomenon over? Have we grown tired of this “overpriced” model?

While there is every chance that consumers around the world are tightening their belts, the more obvious reason for the proposed price reduction is the fact that we will be seeing the iPhone 2 anytime now! Do not be drawn into a false sense of security, do not think that you have got one over the boys and girls at Apple because these are very sharp cookies!

Apple are playing the consumer game, reducing the price of their original iPhone in order to both stimulate demand in the iPhone brand, sell some of the mountain of stock they have and also get the market ready for iPhone part two. But when will the iPhone 2 finally make its appearance?

As the current worldwide economic situation continues to worsen there is every chance that new technology will be held back until at least the feel good factor returns. How long this will take and to what extent we might see a sharp rebound in consumer confidence remains to be seen, but you can guarantee that Apple will be monitoring the situation very carefully, and will know instinctively when to pounce!