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Source: Reuters

Best Buy will be the first national retailer to sell Apple's iPhone in the United States in a partnership that could help drive sales of a device expected to be one of the hottest gadgets this holiday season.

Best Buy, the leading U.S. electronics chain, will announce on Wednesday that it will sell Apple's newly launched 3G iPhone, which lets users connect to the Web at high speeds, at its 970 U.S. stores beginning on Sept. 7.

About 600 stores will also showcase the handset, priced at $199 to $299, in their Apple (NASDAQ: AAPL) mini-shops. Stand-alone Best Buy Mobile shops, which have opened in about 15 U.S. cities, will also sell the device, which requires a two-year contract with carrier AT&T (NYSE: T) to operate.

For Apple, the broadened distribution channel could help achieve its goal of selling 10 million iPhones by the end of 2008. It has sold the device at its smaller network of Apple shops and at AT&T retail stores, with 1 million of the new iPhones sold in their first weekend in July.

AT&T has said that the current waiting period is about seven to 10 days for customers who come in its stores to buy an iPhone in advance. It expects to be able to handle same-day sales within a few weeks time.

Best Buy (NYSE: BBY) is counting on the introduction of the phone to help drive customer traffic and additional purchases during the crucial holiday shopping season, which accounts for roughly one-third of the retailer's full-year sales.

"It solidifies us as the place to go for the cool stuff," Best Buy Mobile President Shawn Score said in an interview. "Our customers are looking for this product."

The addition of the iPhone is a coup for Best Buy, which has picked up market share in mobile phones, computing and flat-panel televisions as main rival Circuit City Stores (NYSE: CC) explores strategic options and struggles to turn around its business.

"We do believe that broadening our assortment and having iPhone in our stores is certainly going to be very important" heading into the holiday season, Score added.

Best Buy, which completed the rollout of mobile shops to its U.S. stores last week, is expanding its product line in mainstay electronics categories as well as branching out into nontraditional areas such as musical instruments. Its mobile shops are a joint venture with Britain's Carphone Warehouse Group.

The company said Monday it would test automated kiosks at major U.S. airports to sell such items as mobile phone accessories and digital cameras to travelers.

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