The device once dubbed “the God machine” risks resembling a fallen angel after Apple cut the price of the iPhone by 33 per cent only 68 days after its launch in the United States.

Apple shares fell $1.75 to $135.01 as investors fretted as to whether iPhone sales are living up to expectations. The $200 cut, to $399 (£197), was unprecedented for an Apple product in its speed. It also fuelled fear that shares in its sector – Apple’s stock is up 60 per cent this year – are overvalued.

Steve Jobs, chief executive of Apple, yesterday admitted it had failed to look after iPhone customers. On the Apple website, he said: “Even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price.”

Apple is to offer people who bought the iPhone before the price cut a $100 credit note to spend in Apple stores. There will be a full $200 refund for those who bought in the past 14 days. Mr Jobs said: “Our early customers trusted us, and we must live up to that.”

Per Lindberg, a Dresdner Kleinwort analyst, this week said rising ratings for makers of handheld devices “display a frightening ignorance of risk”. Noting that $110 billion has been added since the start of April to the total market value of Apple, Nokia, the mobile maker, and RIM, the company behind the BlackBerry, Mr Lindberg said that this “brings back ominous memories from the height of the [dot-com] boom”. He added: “Every launch of any product or service is well received.”

That view may have to be revisited after Apple’s unveiling on Wednesday of the iPod touch. Apple aficionados at the San Francisco debut of the device – which shares most features of the iPhone, bar the facility to make telephone calls – gave it a raucously up-beat welcome. However, some analysts voiced misgivings over the company’s broader strategy and performance.

Bill Shope, a JPMorgan analyst, said that the iPhone’s momentum is flagging. “Yesterday’s event [at which the company revamped the entire iPod range] gives Apple an impressive product lineup for the holiday season, but it also supports our view that margin and iPhone expectations were too lofty,” he said.

In Europe, mobile networks that have fought to win exclusive rights to the iPhone are suddenly faced with a cheaper lookalike product, the iPod touch, competing in the market. That may be bad news for O2 , which is understood to have bowed to Apple’s demand for revenue-sharing to gain the iPhone in the UK. A rival said: “What these operators have paid for is now worth a fraction of what they thought.”

In the US, Apple’s assurance that it will meet its sales target of one million iPhones by the end of this month is being questioned. According to iSuppli, the market researcher, about 220,000 iPhones were bought in July. That pace suggests that Apple will sell, at most, 720,000 in the three months to September, one analyst said.

Adding to unease, the only official figures so far for the device fell short of bullish expectations. In April, Apple said it sold 270,000 iPhones in the product’s first 30 hours. Some on Wall Street had been looking for nearer 750,000. Since then, Goldman Sachs has suggested that Apple will struggle to match the record 21 million iPods sold in last year’s Christmas quarter, even aided by the new touch model.

The analyst consensus suggests an acceptance that Apple has to sacrifice profit margins to gain a foothold in the telecoms sector. Gene Munster, of Piper Jaffray, suggested that Apple’s iPhone price cut signals its long-term aim. He said: “The bottom line: Apple is investing iPhone profit dollars over the next few quarters in order to be a legitimate player in the phone market. We think this is the right strategy.”

Mr Jobs, who has transformed Apple from a niche computer maker to a music powerhouse, gave notice this week that he has not finished reinventing his company. “It’s pretty incredible,” he said of the iPod touch. “This is a revolution.”

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