From £269 to £169 but still on the relatively expensive lengthy monthly contract.

A number of things are happening here.

1) The iPhone isn’t actually that popular in the UK. This is based on their choice of network provider (O2) and cost of the hardware.  Outside of some Tech friends I haven’t actually seen an iPhone in the wild.

2) Apple are about to announce a hardware revision. I would imagine the discontinuation of the 8mb model and the introduction of a 32gb to partner with the existing 16gb version. So O2 don’t want left with a load of 8gb stock they cant sell.

So even at £100 off this is still too expensive over the life of the contract.

As for the hardware revision, the worst kept secret in tech is the inclusion of 3g. One of the biggest stumbling blocks for adoption of the iPhone, particularly in Europe.