July 21 (Bloomberg) -- Apple Inc.'s iPhone 3G is sold out at almost all the company's U.S. retail outlets, 10 days after Chief Executive Officer Steve Jobs put the faster, cheaper upgrade of the mobile handset on the shelves.

Three of Apple's 188 outlets had phones available today, the company said on its Web site. Apple, which has stores in 38 states, sold 1 million phones in the three days after the device debuted on July 11.

The short supply may hinder Apple's efforts to challenge Research In Motion Ltd.'s BlackBerry for the lead in the U.S. market for so-called smart phones, devices that offer Internet access, e-mail and computer functions. After the introduction of the iPhone 3G in 21 countries this month, Jobs plans to reach a total of 70 markets later in the year.

``Apple and its partners can only make them so fast,'' said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon. He expects the shortage to ease in the next few weeks as Apple expands production. ``The current shortage is only negative if Apple isn't able to increase production in the coming weeks.''

Shoppers around the world waited in line for days to be the first buyers of the new phone. AT&T Inc., Apple's exclusive wireless-service partner in the U.S., said last week that nearly all its 2,000 stores were sold out and that customers may have to wait three weeks to get an iPhone. Apple's partners in the U.K., Germany and Japan said most shops had exhausted inventories on the first day.

10 Million Target

The company is seeking to widen its business beyond the iPod media player and Macintosh personal computers, which together account for about 75 percent of sales. Jobs, 53, plans to sell 10 million iPhones this year, capturing about 1 percent of the worldwide mobile-phone market.

Apple continues to ship iPhones daily, spokeswoman Natalie Kerris said today.

The company's store on New York's Fifth Avenue and its outlet in Salem, New Hampshire, still had white versions of the $299, 16-gigabyte handset in stock, according to the online tally. A store in Pleasanton, California, reported having black, 16-gigabyte models available. The company also makes an 8- gigabyte version, in black, for $199.

U.S. customers must sign up for a two-year contract with AT&T, the country's largest phone carrier, at the time of purchase. Contracts start at $70 a month, $10 more than with the previous version.

The company said it will update its retail availability list each evening at 9 p.m. San Francisco time.

Apple, based in Cupertino, California, rose $1.14 to $166.29 at 4 p.m. New York time in Nasdaq Stock Market trading. Dallas- based AT&T fell 29 cents to $31.83 on the New York Stock Exchange.

Apple will report financial results for the third quarter, which ended June 28, after U.S. markets close today.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: July 21, 2008 16:08 EDT