Attempts by European operators to reduce their stocks of existing iPhones by offering cut-price deals have flopped with consumers. Insiders at O2 UK claim the recently launched "free iPhone" deals have proved particularly unpopular because of the need by subscribers to sign a 24-month contract priced at between €35 and €45 per month.

This lack of success has prompted O2, which looks increasingly likely to lose its exclusivity deal for the iPhone sometime this year, to divert most of its advertising budget to promoting the iPhone, as well as redirecting the majority of its handset subsidies so it can offer the iPhone for free.

This panic to shift existing product can only increase as more "details" leak out regarding the specification of the new iPhones, which are rumoured to be announced in June. The latest speculation--Apple has confirmed nothing--claims there will be a high-end model aimed at the US and Europe, and a low-end iPhone which will be marketed to Russia, China, India and Brazil. The high-end device is thought to have video support, a better digital camera and 32Gb of memory; while the cutdown iPhone might not have video or WiFi, and would have less memory.

Other features high on the iPhone watchers' list include a move to 802.11n for WiFi, and an FM transmitter to make redundant the cumbersome accessory necessary for many users to hook-up the iPhone to a car radio.

For more on this story:
Mobile Today [1], Stuff TV [2] and TechWatch [3]

Related stories:
Orange France slashes iPhone price [4]
iPhone stumbles in Russia [5]
iPhone prices slashed as operators prepare for new product, and will O2 lose UK exclusivity [6]
What's new and what's missing in iPhone OS 3.0 [7]