According to Cnet and a report from financial analyst firm Sanford C. Bernstein, the world may soon be drowning in unsold iPhones. Pointing to announcements that Apple had sold 3.7 million iPhones to its partners like AT&T last year but AT&T had only activated 2 million of them, many are wondering what those other 1.7 million phones are up to.

Some are in Europe, but combined, the resellers in the UK, France, and Germany sold an estimated 400,000 phones last year. As Cnet notes, 1.3 million phones have certainly not been bought by people intent on unlocking them (Apple estimated 250,000 as of October)... but any way you cut it, hundreds of thousands of iPhones are out there, waiting for you to come and buy them. With a whopping 4,400 iPhone distributors worldwide, Bernstein estimates there are 150 unsold phones sitting in each store, a huge number in the world of consumer electronics.

Apple wants to sell 10 million iPhones this year, and launches in other parts of the world will help it get there (that's about 1% of the cell phone market worldwide). But if demand is already flagging on its home turf, what then? Could it be that consumers are sitting it out, waiting for a 3G version of the phone? (I know I am.) And if so, what happens to all those old handsets? My guess? Don't be surprised if we see another round of iPhone price cuts in advance of that 3G iPhone release.

LINK: Report: iPhones piling up at AT&T stores