Apple believes a quarter of a million iPhones were sold to users who plan to unlock the device, the company told analysts last night.

The company revealed that it sold 1,119,000 in its fourth quarter, bringing cumulative fiscal 2007 sales to 1,389,000 - Apple has sold over one million iPhones in the first 74 days since the product was introduced.

Apple's iPhone business accounted for 1.9 percent of the company's total quarterly revenue. The company recognises revenue from iPhone sales (and its share of any mobile network charges) over 24-months. It admitted iPhone revenue of $118 million in the quarter.

The company’s deferred revenue for both the iPhone and AppleTV stood at $636 million at the end of the quarter, up from $180 million at the end of June, indicating substantial regular income in the coming quarters.

Noting that the iPhone's record of one million sales in just over three months already eclipses the rate of sales for the first-generation iPod (which took two years to achieve 1.4 million sales), Apple chief financial officer Peter Oppenheimer said: "We're selling these things faster than iPods, and we're in Europe, and we're going to be hitting Asia in '08.

Apple chief operating officer Tim Cook said company management remains "very confident" that it will achieve ten million iPhone sales in 2008.

Cook also confirmed reports that Apple is working with online applications vendor to build a version of that company's business software for the iPhone.

Asked if Apple was seeing business use of the device, Cook said: "Clearly, there’s some businesses buying them and very much enjoying them."

Apple's iPod business accounted for 26 per cent of its total quarterly revenue. The company sold 10.2 million iPods in the quarter, meaning 120 million have been sold so far. Apple said it was too early to tell if the release of the iPhone had cannibalised iPod sales.