Apple chief executive Steve Jobs defended his company's decision on Thursday to cut the price of the iPhone device by $200 this week, but offered existing buyers a $100 store credit and an apology after some complained of the sudden drop.

First, I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it, Jobs said in a letter posted on the company's web site.

Citing the need to generate as many customers as possible, he said the company needed to cut the price.

iPhone is a breakthrough product, and we have the chance to 'go for it' this holiday season, he said.

The company had previously reported that it sold 270,000 iPhones during the first two days of sales earlier this year and expects to sell 1 million by the end of September. The credit offer could cost company tens of millions of dollars.

A separate Apple policy allows customers to get a refund of the difference within 14 days of a product price cut.

Jobs said that while technology products are always being surpassed by newer ones, it was up to firms like Apple to give good support to existing customers.

…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, he added.

The $100 store credit would be available to anyone who bought an iPhone from either Apple or AT&T and who did not receive a rebate or any other consideration. The credit could be used at any Apple retail store or online Apple store. Details will be given out next week.

We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple, he concluded.