Apple's iPhone sales in Europe are better than industry observers believe, said RBC Capital analyst Mike Abramsky yesterday.

Based on visits to to iPhone retail outlets and meetings with various mobile networks in Europe, the analyst expects Apple to sell between 400,000-500,000 iPhones in the first quarter, by 31 December.

"iPhone appears to be an early hit with European Smartphone consumers," the analyst said, noting the device is outselling competing solutions from other makers. He expects the purported introduction of a 3G iPhone will boost demand and sales in Europe.

The analyst expects Apple to sell four million units in Europe next year; forecasting total 2008 calendar year iPhone sales at 12.5 million.