Apple on Monday said it has sold its one-millionth iPhone -- just 74 days after its launch June 29.

The company said it reached the milestone on Sunday. Apple said it took nearly two years to sell the first million iPods. The portable music player, launched in October 2001, accounts for about three quarters of the market for MP3 players.

Apple has set a goal of selling 10 million iPhones in its first year. The company last week dropped the price of the combination mobile phone and media player by $200, saying it believed the new price of $399 would mean more sales during the upcoming holiday shopping season. Analysts, however, have questioned whether the original price of the iPhone was too high to gain acceptance beyond Apple fans to mainstream consumers.

The iPhone, which uses an innovative touch-screen navigation system, is one of Apple's most important product launches. The gadget takes the company into a new market, competing against established smartphone makers. Those companies include Research In Motion, which makes the BlackBerry; Palm, maker of the Treo; Motorola, Nokia and Samsung.

Apple fans made the iPhone the hottest selling smartphone in the United States in July, according to iSuppli. The market research firm credited the meteoric rise in large part to demand built up by months of hype leading up to the gadget's release. The real proof of whether Apple has a big winner will be determined in the coming months as demand patterns stabilize, iSuppli said.

Apple has already stumbled in pricing the iPhone. The recent price cut sparked a firestorm of angry postings on the Web by iPhone buyers who felt cheated in paying the original $599 for the device. To make amends, Apple is offering those customers $100 credit on any Apple product purchased at one of the company's stores or on its Web site.