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iPhones being sold at loss in Europe?

Steep price cuts on the iPhone in the U.K. and Germany this week might mean those carriers have little choice but to incur losses in order to dump inventory ahead of a 3G iPhone launch.

Steep price cuts to the iPhone in Europe are a sign that carriers overestimated demand for Apple's first smartphone, according to a report.

O2, the iPhone's U.K. carrier, and T-Mobile, its German carrier, both cut the price of the iPhone by a significant margin this week, in a move seen by many as a prelude to the debut of a 3G iPhone within the next couple of months.

Before the 3G iPhone arrives, carriers will need to clear their shelves of the current EDGE model, which will look pedestrian next to the faster model. An O2 representative told our sister site Crave U.K., in an utterly predictable statement, that the price cut was not a prelude to a 3G launch.

Apple CEO Steve Jobs introduces the British press to the iPhone last year. ZDNet U.K.

The Times Online cites Morgan Stanley analyst Kathryn Huberty as predicting that the carriers will take a loss on the discounted handsets. It seems that strong demand for the iPhone in the U.S. was not replicated in Europe, where consumers are more familiar with sophisticated phones and high-speed cellular networks.

The report also said the 3G iPhone would be "radically different" than the current model, which would be the first time I've heard that contention. Possibilities for the new iPhone, according to the Times Online, include a clamshell model with a larger screen or a slider with a QWERTY keyboard, both of which would indeed be quite a departure from the current design for the iPhone.

Apple may one day have plans to build a clamshell iPhone, as evidenced by a recent patent application, but it seems unlikely that the company would change the style so quickly. Of course, in 2005 Apple dropped its best-selling iPod--the iPod Mini--to introduce the iPod Nano, and that worked out pretty well.