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Tuesday, November 27, 2007, 08:00 am PT (11:00 am ET)

Apple's London flagship still warming initial iPhone supply?

The slower than expected adoption of Apple Inc.'s iPhone amongst UK consumers may be most apparent at the company's local home base in London, where its largest flagship retail store is reportedly still working off initial inventories of the touch-screen handset.

Speaking to AppleInsider, an anonymous source claims the Cupertino-based company's high-profile retail store on Regent Street as of this week was still sitting on iPhone stock received ahead of the UK launch earlier this month.

The shipment of several thousand iPhones, received just prior to the November 9th roll-out, has since been moving slowly, at a rate of less than 100 per day, the source said.

Given that the prominent Regent Street shop is the largest of Apple's thirteen UK-based locations — and also the largest Apple retail store worldwide — those sales figures are considered "very poor," the source added.

A recent report suggested that Apple's exclusive UK iPhone carrier O2 activated just 26,500 iPhones during the handset's first two weeks of availability, well below internal expectations rumored in the ballpark of 100,000 units.

So what's to blame for the glacial pace of adoption thus far? According to market research firm GfK Group, it may have a lot to do with the handset's cost of 269 pounds ($554), which it claims is rather steep in the face of UK consumers who are not used to paying in excess of 200 pounds for a phone.

According to the firm's recent survey, 72 percent of respondents said that they would not buy an iPhone solely due to the price. In fact, only 2 percent said they were even considering placing the iPhone on their Christmas lists.

Potentially compounding matters may be early gripes from consumers about the quality of the signal iPhone's are receiving from O2's wireless network in the UK and the fact that the phone can not be used with rival service carriers.

Customers on Apple's discussion forums are blowing off steam, reporting that they are having reception issues, and that it appears to be the iPhone itself causing the problems. Some users are switching from an older handset to the iPhone, and noticing the drop in reception, whereas others are merely wandering around, watching the signal typically fluctuate between zero and three bars.

Curiously, when the iPhone is attached to the charging dock, reception increases to five bars for those users. In general, software restores have helped in some cases, and new phones have reportedly helped in others.

Still, the early adoption woes are noting new for Apple and its iPhone. The U.S. launch of the handset back in June was similarly marred by service related issues when AT&T's activation system left thousands of customers frustrated and unable to properly use their new phones. Initial sales also failed to meet Apple's internal expectations, spurring an unprecedented $200 price cut on the handsets just 8 weeks later, eventually getting the ball rolling.

That price cut and questions of whether UK customers could expect a similar move following the local iPhone launch were some of the topics reporters discussed with Apple chief executive Steve Jobs ahead of this month's UK iPhone launch.

Specifically, Jobs was asked what assurance UK customers have that Apple isn't going to turn around in two months and announce a dramatic iPhone price cut like it did in the U.S.

"I don't think that's going to happen," Jobs said, "but in technology there are no guarantees."