Softbank, the exclusive mobile phone operator for Apple's iPhone in Japan, is to start giving away the touchscreen phones for free.

Amid muttered suggestions of poor sales in a highly sophisticated phone market, Softbank will now offer the 8GB iPhone 3G for free on a 2-year contract. The company was charging 23,040 yen - around £166.

The 16GB model will still demand a premium - but this has been reduced from £249 to £83. In addition, the monthly charge for internet access via the handset has been reduced.

O2, the official iPhone operator in the UK, revealed this week that total sales for the iPhone in the UK - both the original and 3G version - have only just hit the 1million mark in over 16 months of sales.