Apple's decision to cut iPhone prices was combined with increased output of the devices, a report claims.

Meanwhile, Wall Street analysts bible TheStreet.com is also warning that a 3G version of the device will debut in the first quarter of 2008.

The initial report indicates that Apple chose to increase production on the iPhone in tandem with its decision to cut prices on the product as it anticipates increased sales.

UBS analyst Ben Reitzes has increased his estimate on iPhone sales to 3 million from 2.3 million.

"A successful price cut has cleared the way for Apple to boost iPhone production," TheStreet.com has learned. "A source familiar with the latest info says Apple is raising its manufacturing target for the quarter ending Dec. 31."