Report: 10 percent of September iPhones sold to unlocking teams

[AppleInsider]

Analysts for investment bank Piper Jaffray recently spent more time tracking unit sales at Apple Inc.'s retail stores and reported Thursday that their observations indicate that as many as 10 percent of the iPhones sold by the stores during the month of September were being purchased with the intention to be resold unlocked.

"In late September we spent 12 hours counting iPhone, iPod and Mac sales in Apple stores across the country," analyst Gene Munster wrote in a research note to clients. "During our store checks we noticed many people buying iPhones in the maximum 5 per customer allotments, which we believe were being purchased to be unlocked and operated on carriers other than AT&T."

The analyst said this trend was especially noticeable in the New York City stores, where one Apple employee acknowledged that customers were buying five iPhones per store visit in order to turn around and resell them unlocked.

"At one point during the visit, the store sold out of iPhones," he added. "Judging from our checks, as much as 10 percent of the iPhones sold in September were purchased with the intention to be resold unlocked."

Munster went on to note that on September 27th Apple released iPhone software version 1.1.1, which rendered most of the unlocked phones inoperable and in doing so effectively minimized the market for unlocked iPhones. Just prior to this move, however, he said that iPhone sales at Apple retail stores had stabilized at an approximate 56 percent increase to the rates witnessed just prior to the handset's significant $200 price cut on September 5th.

Meanwhile, the analyst and his team were also tracking unit sales of Macs and iPods at the company-owned stores.

Since his last round of checks in the July and August timeframe, Mac momentum appeared to have slowed some 39 percent. But this "makes sense," he said, given the passing of the strong education-related shopping season in August. He continues to expect Apple to report September quarter Mac sales of approximately 2.0 million to 2.1 million versus the Street's consensus of 1.95 million.

While Munster did not have data from August with which to compare his September iPod checks, he was able to provide some observations on the breakdown models.

"Of the iPods we counted, 39 percent were nanos, 36 percent touches, 16 percent shuffles, and 9 percent classics," he wrote. "We continue to believe iPods are tracking to the Street consensus in September of 10.6 million [units]."

The Piper Jaffray analyst maintained his "Outperform" rating and $211 price target on shares of Apple.

[ View this article at AppleInsider.com ]

[bg_nyc]

Originally Posted by AppleInsider

Since his last round of checks in the July and August timeframe, Mac momentum appeared to have slowed some 39 percent. But this "makes sense," he said, given the passing of the strong education-related shopping season in August. He continues to expect Apple to report September quarter Mac sales of approximately 2.0 million to 2.1 million versus the Street's consensus of 1.95 million.

Umm... could this be because people are waiting for Leopard also?!?!

[Gustav]

Some companies are using iPhones as employee bonuses - did Piper Jaffray take that into account too. Purchasing 5 phones does not absolutely mean you will be unlocking them and reselling them. Though I do believe a significant portion of those sales probably are.

[freelander51]

Originally Posted by AppleInsider

"In late September we spent 12 hours counting iPhone, iPod and Mac sales in Apple stores across the country," analyst Gene Munster wrote in a research note to clients. "During our store checks we noticed many people buying iPhones in the maximum 5 per customer allotments, which we believe were being purchased to be unlocked and operated on carriers other than AT&T."

12 hours is hardly a representative sample for statistics - isn't it ?

[zorinlynx]

The fact that so many iPhones were being bought just to be unlocked shows that...

Holy crap, there's a market for unlocked iPhones!

I hope Apple eventually realizes this and starts giving us a choice. If they make it unlocked, most people will probably still go with AT&T, since it's so convenient to sign up through iTunes and all. But when they travel, they'll have the convenience of using other sim cards.

There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.

[JeffDM]

Originally Posted by zorinlynx

There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.

There's only one other major GSM carrier in the US. I would expect that most unlocked phones are going to people in other countries.

[shetline]

Originally Posted by freelander51

12 hours is hardly a representative sample for statistics - isn't it ?

Maybe not good enough for really accurate statistics, but when you see the same phenomena at "stores across the country" (however many that might be) I think it's fair to say that "a lot" of this must being going on.

The incentive for re-cracking the latest iPhone software must be pretty high.

[lkrupp]

Originally Posted by zorinlynx

The fact that so many iPhones were being bought just to be unlocked shows that...

Holy crap, there's a market for unlocked iPhones!

I hope Apple eventually realizes this and starts giving us a choice. If they make it unlocked, most people will probably still go with AT&T, since it's so convenient to sign up through iTunes and all. But when they travel, they'll have the convenience of using other sim cards.

There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.

So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you? What would at&t do if Apple started selling unlocked phones? Would they just sit back and do nothing to enforce their exclusive CONTRACT?

Why can't you unlock-a-holics use your brains and think before you post such drivel? Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?

I really would like a coherent answer from you people.

[zorinlynx]

Originally Posted by lkrupp

So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you? What would at&t do if Apple started selling unlocked phones? Would they just sit back and do nothing to enforce their exclusive CONTRACT?

Why can't you unlock-a-holics use your brains and think before you post such drivel? Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?

I really would like a coherent answer from you people.

There's this wonderful concept known as "renegotiating a contract". AT&T is benefiting greatly from iPhone sales right now. They'd probably lose a lot more than they'd have to gain in a lawsuit if Apple decided to tell them to go f**k themselves.

Both sides benefit from this contract. Contracts can be renegotiated. Just because it's a certain way now doesn't mean it can't be changed.

[shetline]

Originally Posted by lkrupp

So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you?

I fully expect that Apple has to keep trying to undo any hacks that unlock iPhones. I just don't wish them the greatest luck at it, and I would be quite happy if Apple expends the absolute minimum of effort to be in compliance with whatever the fine details of their contract with AT&T require.

I say this as someone who has an iPhone and no current desire to switch to a carrier other than AT&T. The only "unlocking" I'm really interested in is the kind that will allow me to add desirable third-party features to the phone.

I cheer on the hackers because I want big corporations like AT&T, and Apple too, to feel a clear sense of futility when they try to limit what we can do with their products with artificially imposed restrictions.

[quinney]

Originally Posted by lkrupp

Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?

I really would like a coherent answer from you people.

What does Exxon have against Apple?

[Bregalad]

I'm starting to see iPhones here in Canada where hacking is the only way to use them. Rogers' (the only GSM network here) data rates are so incredibly high that nobody can really afford to use them for the web unless they're in a WiFi hotspot, but that isn't stopping people from buying them. It makes me think the number of iPhones going overseas before 1.1.1 must have been huge, particularly in places where affordable data plans exist.

I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing. Clearly Apple could have sold millions of iPhones by now if they were available worldwide and unlocked. Carriers could have then battled for customers by offering addiditonal features like visual voice mail.

Apple taking a percentage from the carriers is certainly an interesting development, but consumers would be better served if all cell phones were unlocked and carriers had to battle each other constantly.

[Bregalad]

In addition to appeasing AT&T and protecting that other revenue stream, Apple has an important and completely selfish reason for trying to keep iPhones locked down: every process runs with root privileges. That is such a fundamentally stupid mistake that they're now forced to attack 3rd party software.

[shetline]

Originally Posted by Bregalad

I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing.

I suppose having an established carrier as a distributer and supporter of their technology was considered a plus.

Also, for Apple to get their version of random-access voice mail to work -- which I consider a huge improvement over standard touch-tone menu interfaces -- they needed to enlist a carrier to implement the necessary protocols to support that feature.

Whether or not those reasons together, plus whatever else I might not be thinking of right now, add up to good enough a reason to sign an exclusive deal with AT&T I can't say for sure. Certainly a five year exclusive agreement seems excessive. That's an eternity when it comes to a product like the iPhone.

[dfiler]

Piper Jaffray is basing this analysis on a breif anecdotal observation? Completely worthless if you ask me.

The iPhone is "cool" and everyone is talking about it. News sites (and analysts) should take some responsibility and not parrot speculation as fact. Even though it gets them higher click counts and advertising revenue. While the bullshit quotient of "news" is high in this day and age, the iPhone seems to have taken it to a new level.

[nagromme]

Originally Posted by zorinlynx

The fact that so many iPhones were being bought just to be unlocked shows that...

Holy crap, there's a market for unlocked iPhones!

Well, no, it shows that there are people who THINK there is a market for unlocked, unsupported iPhones. These aren't people interested in HAVING unlocked phones, but people interested in making a buck selling them. Buyer beware.

And of course there IS a market, especially for export to Canada etc.--especially if the seller isn't honest about the drawbacks. Is the market AS big as these 5-at-a-time buyers think? We will see. They can always stop buying them if demand is slow.

Originally Posted by Bregalad

I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing.

They never thought that. An exclusive was, however a NECESSARY thing. We don't know how many carriers Apple approached and was turned down, but we know that in order to make the iPhone everything it is, Apple needed to ask a LOT from carriers. They asked for things carriers have never given anyone before. And so the carriers (AT&T) could demand something in return. An exclusive. Carriers have arranged exclusives for a lot less reason with many different phones. But this time the reasons are bigger. In addition to whatever financial kickbacks Apple may have arranged--maybe unusually high?--Apple is asking them to:

* Build and support the new visual voicemail system (which only works on AT&T because only AT&T--with Apple--created it)

* Abandon the long-dominant U.S. subsidy model that devalues phones but draws mobile customers with the false lure of cheap gadgets

* Totally change their activation procedure, and create a new, easier system for online activation integrated with iTunes

* Give up all kinds of control--from pricing to marketing--to Apple. A brand that has thrown its weight around in the music industry enough to scare other industries (like the movie industry and mobile carrier industry).

Apple couldn't get those things without agreeing to an exclusive for a time. Just like Apple could never have gotten the recording industry to allow iTunes to exist without agreeing to use DRM.

Apple doesn't like carrier lock-in OR DRM. Neither one helps Apple. But they help companies that Apple CANNOT conduct business without.

This isn't an arrangement Apple can turn around and change overnight.

[EagerDragon]

Buy a $399 iPhone, hack it and sell an iBrick for $0.10 to Home Depo. Great deal.

[lantzn]

10% of the iPhones sold to unlock.
90% of the iPhones sold as AT&T plans.

Hmm...these must be the 10% of the iPhone "users" who are whining or suing Apple for lowering the price and/or locking the phones. It's tough when a guy can't even make a decent profit these days, right guys?

[TenoBell]

I know someone who bought one of these phones. He bought it because he wanted an iPhone but wanted to stay with T-Mobile. The consequence is that he cannot update Apple's software. Sometimes his phone does something weird and asks me if mine is doing the same thing, my answer is always "nope".

[aaarrrgggh]

Originally Posted by lkrupp

So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm?

Actually, it's pretty simple... just sell them unlocked in markets outside where you plan to negotiate exclusive deals. This eliminates 90% of the people trying to unlock the units. Negotiate better data plans with the companies you negotiate exclusivity with. Right now, higher data prioritization would be enough to make a pretty big difference.

[zanshin]

Originally Posted by lkrupp

So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? I really would like a coherent answer from you people.

Business Law 101: any contract can be renegotiated at any time by the parties. If at&t gives Apple too much crap about it, Apple could probably make a new (better) model using different technology (Intel chips? maybe the new iNewton?) and sign up with someone else.

Or drop the whole thing like Moto did Meridian, and watch at&t support existing users for 2 years or more with no hope of getting any new ones though Apple.

(oh, wait, I forgot Apple's five year, 3-city Starbucks "buy a song" program, or is that for the Touch only?

[Johnny Mozzarella]

Originally Posted by zorinlynx

...An iPhone sale + no additional revenue is still more money than no iPhone sale.

Not necessarily, since locking was a condition of the revenue sharing agreement.
Were Apple to sell unlocked phones, it would mean giving up ALL revenue sharing.
Cingular has a 5-year exclusive agreement...that means you won't see Apple selling unlocked phones till this agreement expires.

By then Google will have their 700Mhz coast-to-coast wireless network.
What happens at that point is anybody's guess.

[Johnny Mozzarella]

Originally Posted by zanshin

Business Law 101: any contract can be renegotiated at any time by the parties. If at&t gives Apple too much crap about it, Apple could probably make a new (better) model using different technology (Intel chips? maybe the new iNewton?) and sign up with someone else.

Or drop the whole thing like Moto did Meridian, and watch at&t support existing users for 2 years or more with no hope of getting any new ones though Apple.

(oh, wait, I forgot Apple's five year, 3-city Starbucks "buy a song" program, or is that for the Touch only?

I'm sure AT&Ts lawyers didn't think of that

[shetline]

Originally Posted by zanshin

Business Law 101: any contract can be renegotiated at any time by the parties. If at&t gives Apple too much crap about it, Apple could probably make a new (better) model using different technology (Intel chips? maybe the new iNewton?) and sign up with someone else.

It would be interesting to see the specifics of the deal -- like did Apple sign up for a 5-year exclusive deal for any phone they produce, just this current model, a somehow-defined product line of phones?

I'd think AT&T wouldn't have gone for something with such an easy out as the current model only, but perhaps Apple left themselves some wiggle room for some sufficiently different future phone model.

[geekatthethrone]

I have firsthand experience with this. One time I was at the Apple Store. Five guys were outside, and very methodically went in one at a time to purchase 5 iPhones. Not much Apple can do with these circumstances. I can understand that they don't want to ruin their brand image, but it means more money for Apple. As a shareholder, I approve.

[Bregalad]

Originally Posted by nagromme

An exclusive was, however a NECESSARY thing. Apple is asking them to:

* Build and support the new visual voicemail system (which only works on AT&T because only AT&T--with Apple--created it)

* Abandon the long-dominant U.S. subsidy model that devalues phones but draws mobile customers with the false lure of cheap gadgets

* Totally change their activation procedure, and create a new, easier system for online activation integrated with iTunes

* Give up all kinds of control--from pricing to marketing--to Apple. A brand that has thrown its weight around in the music industry enough to scare other industries (like the movie industry and mobile carrier industry).

Apple couldn't get those things without agreeing to an exclusive for a time. Just like Apple could never have gotten the recording industry to allow iTunes to exist without agreeing to use DRM.

Apple doesn't like carrier lock-in OR DRM. Neither one helps Apple. But they help companies that Apple CANNOT conduct business without.

This isn't an arrangement Apple can turn around and change overnight.

I must respond to your points:

- The iPhone would still have sold millions without visual voicemail, particularly if it supported 3rd party applications in a properly secured user space.
- The iPhone is such a "gotta have" item that its very existence is attacking the US subsidy model.
- I agree that activation through iTunes wouldn't have happened without an exclusive.
- An unlocked iPhone could have been priced and marketed by Apple without the participation of the carriers. AT&T didn't give Apple anything they didn't already have.

So essentially you're arguing that visual voicemail, activation through iTunes and some usage based revenue from AT&T is worth limiting potential sales to a small segment of Americans. I disagree.

[Taskiss]

Originally Posted by Bregalad

So essentially you're arguing that visual voicemail, activation through iTunes and some usage based revenue from AT&T is worth limiting potential sales to a small segment of Americans. I disagree.

I believe that you have the advantage of knowing something that was unknown at the time the decisions were made.

Apple could have very well been the only one at the dance when the iPhone was introduced. In order to mitigate the potential damage they formed critical partnerships to reduce that damage a commercial failure of the iPhone would have imposed.

It could have been very ugly. Apple was making it's initial foray into a very competitive market with absolutely no experience. Partnering with an experienced service provider was very smart. So, they have to now dance with their date 'till the dance is over.

[mstone]

I'm painting with a broad brush here, but in my opinion, the people who are adamant about hacking the iPhone are typical of the type of people who have become all too common in our society. They are obsessively greedy, impatient, and rude. You see them on the street. The way they drive, the way they act, it's despicable. They cheat, lie, steal, or whatever it takes to get what they want as fast as possible with no respect for the law, common courtesy or other people.

Apple is trying to build something unbelievably cool and sophisticated but the these arrogant weenies are unwilling to wait for it to be completed. The iPhone is coming to Europe next month and Asia next year, and eventually we will get the API. These things take time to implement. It's sort of like a marriage, between Apple and the end user. Like marriage, you have to be patient in order to obtain the best result. Why people want to go jumping into bed with every hooker (hacker) that comes along is beyond any logic. It's like digital prostitution which threatens to destroy the potential beauty of the iPhone before it is fully developed.

Sorry about your bricked phone...not!

[JeffDM]

Originally Posted by mstone

I'm painting with a broad brush here, but in my opinion, the people who are adamant about hacking the iPhone are typical of the type of people who have become all too common in our society. They are obsessively greedy, impatient, and rude. You see them on the street. The way they drive, the way they act, it's despicable. They cheat, lie, steal, or whatever it takes to get what they want as fast as possible with no respect for the law, common courtesy or other people.

Apple is trying to build something unbelievably cool and sophisticated but the these arrogant weenies are unwilling to wait for it to be completed. The iPhone is coming to Europe next month and Asia next year, and eventually we will get the API. These things take time to implement. It's sort of like a marriage, between Apple and the end user. Like marriage, you have to be patient in order to obtain the best result. Why people want to go jumping into bed with every hooker (hacker) that comes along is beyond any logic. It's like digital prostitution which threatens to destroy the potential beauty of the iPhone before it is fully developed.

Sorry about your bricked phone...not!

That's more than a bit much.

[nagromme]

Originally Posted by Bregalad

So essentially you're arguing that visual voicemail, activation through iTunes and some usage based revenue from AT&T is worth limiting potential sales to a small segment of Americans. I disagree.

Well, more precisely, I'm arguing that Apple chose to limit sales to a LARGE segment of Americans (people change carriers all the time) in order to obtain those things, and the others I listed.

Would giving up Visual Voicemail and easy activation have been "worth it?" How many features would be "worth" losing to make the iPhone sell to non-AT&T customers? Apple has often opted for a better product rather then just shoving mass numbers out the door--and I'm not sure I disagree with that.

[shetline]

Originally Posted by mstone

I'm painting with a broad brush here, but in my opinion, the people who are adamant about hacking the iPhone are typical of the type of people who have become all too common in our society.

You are correct... you are painting with a broad brush.

What you're saying may characterize some users of hacks -- after all, all they have to do is go download something someone else poured a lot of effort into, someone else who often provides the end result of his or her labors to the world for free. Most of the hackers themselves have to be a pretty patient lot, more driven by the challenge of solving puzzles than by the kind of pushy, greedy, type-A personality you describe. It's far easier to wait for a few months for a new feature (which may or may not ever be forthcoming) than it is to plow through hex dumps and decompiled code for hours and hours on end, day after sleepless day, to reverse engineer what's going on inside something as complex as an iPhone.

[mstone]

Originally Posted by shetline

Most of the hackers themselves have to be a pretty patient lot, more driven by the challenge of solving puzzles than by the kind of pushy, greedy, type-A personality you describe. It's far easier to wait for a few months for a new feature (which may or may not ever be forthcoming) than it is to plow through hex dumps and decompiled code for hours and hours on end, day after sleepless day, to reverse engineer what's going on inside something as complex as an iPhone.

As clever as the hackers may see themselves, by reverse engineering copyrighted software they are blatently ignoring the terms of use of the iPhone, which puts them squarely into the group of degenerates I refer to.

(c) Except as and only to the extent permitted by applicable law, or by licensing terms governing use of open-sourced components included with the iPhone Software, you may not
copy, decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, or create derivative works of the iPhone Software, iPhone Software Updates, or any part
thereof. Any attempt to do so is a violation of the rights of Apple and its licensors of the iPhone Software and iPhone Software Updates. If you breach this restriction, you may be
subject to prosecution and damages.

[JeffDM]

Originally Posted by mstone

As clever as the hackers may see themselves, by reverse engineering copyrighted software they are blatently ignoring the terms of use of the iPhone, which puts them squarely into the group of degenerates I refer to.

(c) Except as and only to the extent permitted by applicable law, or by licensing terms governing use of open-sourced components included with the iPhone Software, you may not
copy, decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, or create derivative works of the iPhone Software, iPhone Software Updates, or any part
thereof. Any attempt to do so is a violation of the rights of Apple and its licensors of the iPhone Software and iPhone Software Updates. If you breach this restriction, you may be
subject to prosecution and damages.

Still, that's exactly the kind of thing that Steve used to do in college, he sold devices that allowed people to get free long distance from AT&T which was and is theft of service. Hacking the iPhone is hardly on that league. A lot of those attributes you ascribe to "degenerates" are attributes that Apple fans say that Jobs still possesses, so true fairness would not make the slam in a one sided way.

I think your "marriage relationship" that you allude to before is a lot more like long-term prostitution that you'd like to admit, the user repeatedly gives money to Apple in exchange for products and services. It's almost like a prostitute/pimp relationship in some ways, or maybe marriage in the times where one party basically owned the other. That's not really a relationship that's anything like modern marriage, which was a very silly to absurd comparison in the first place. It's just a device, not anything resembling a healthy social relationship.

[lfmorrison]

Originally Posted by mstone

As clever as the hackers may see themselves, by reverse engineering copyrighted software they are blatently ignoring the terms of use of the iPhone, which puts them squarely into the group of degenerates I refer to.

(c) Except as and only to the extent permitted by applicable law, or by licensing terms governing use of open-sourced components included with the iPhone Software, you may not
copy, decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, or create derivative works of the iPhone Software, iPhone Software Updates, or any part
thereof. Any attempt to do so is a violation of the rights of Apple and its licensors of the iPhone Software and iPhone Software Updates. If you breach this restriction, you may be
subject to prosecution and damages.

Let's just play with that quote a little bit:

(c) Except as and only to the extent permitted by applicable law, or by licensing terms governing use of open-sourced components included with the iPhone Software, you may not copy, decompile, reverse engineer, disassemble, attempt to derive the source code of, modify, or create derivative works of the iPhone Software, iPhone Software Updates, or any part thereof. Any attempt to do so is a violation of the rights of Apple and its licensors of the iPhone Software and iPhone Software Updates. If you breach this restriction, you may be subject to prosecution and damages.

So, the people who have modified the iPhone software to run on a different network, as provided under applicable law in the USA, have not violated the language of the EULA. However, they are the ones who end up with bricked phones under Apple's most recent update.

(I'm not arguing that Apple did anything "wrong" in their update - I don't have enough facts to make that call. I am simply pointing out that the alternate-network hackers didn't breach the iPhone software EULA.)

The people who did other things like install 3rd party native software, were in violation of the language of the EULA, because those activities are not specifically covered by any applicable law. And yet their phones, for the most part, are still functional post-update, albeit with the 3rd party software (temporarily perhaps) disabled.

[Taskiss]

Originally Posted by lfmorrison

So, the people who have modified the iPhone software to run on a different network, as provided under applicable law, have not violated the language of the EULA. However, they are the ones who end up with bricked phones under Apple's most recent update.

(I'm not arguing that Apple did anything "wrong" in their update - I don't have enough facts to make that call. However, I am arguing that the alternate-network hackers didn't breach the iPhone software EULA.)

The hackers who distributed the code that allows using an alternative network violated the EULA (assuming they reverse engineered the device to obtain the info necessary to do the hack), the owners of the phone didn't.

The people who did other things like install 3rd party native software, were in violation of the language of the EULA, because those activities are not specifically covered by any applicable law. And yet their phones, for the most part, are still functional post-update, albeit with the 3rd party software (temporarily perhaps) disabled.

Yes. Well, that's my opinion, the legalities require more than the opinion of an anonymous internet poster, but yes.

[shetline]

Originally Posted by mstone

As clever as the hackers may see themselves, by reverse engineering copyrighted software they are blatently ignoring the terms of use of the iPhone, which puts them squarely into the group of degenerates I refer to.

Whether such behavior is "degenerate" or not could be argued all day, but even if I give you that it is "degenerate" (which I don't) there are all kinds of degenerate personalities, and in most cases I think the particular personality you describe is way off the mark.

[wnurse]

Originally Posted by zorinlynx

There's this wonderful concept known as "renegotiating a contract". AT&T is benefiting greatly from iPhone sales right now. They'd probably lose a lot more than they'd have to gain in a lawsuit if Apple decided to tell them to go f**k themselves.

Both sides benefit from this contract. Contracts can be renegotiated. Just because it's a certain way now doesn't mean it can't be changed.

AT&T has a lot more to lose?. They could sue apple for billions (yes, that was with a b, i could capitalize it if you want).

Don't be silly. How much money AT&T is making is irrelevant as to whether Apple can break the contract.
Where do you think this stuff up?.

Also contracts can only be renegotiated if both parties agree to renegotiate.. apple cannot declare they are renegotiating and then have it happen. I know we all believe in the power of Steve (at least those that drank the coolaid and is effected by his reality distortion field) but even he cannot make something happen by snapping his fingers (he's more powerful than you and I but his power stops just short of being a god).

[wnurse]

Originally Posted by zanshin

Business Law 101: any contract can be renegotiated at any time by the parties. If at&t gives Apple too much crap about it, Apple could probably make a new (better) model using different technology (Intel chips? maybe the new iNewton?) and sign up with someone else.

Or drop the whole thing like Moto did Meridian, and watch at&t support existing users for 2 years or more with no hope of getting any new ones though Apple.

(oh, wait, I forgot Apple's five year, 3-city Starbucks "buy a song" program, or is that for the Touch only?

This is a dumb reply on many levels.

1. Apple agreement with AT&T is not dependent on the chips inside the iphone or the software version the iphone runs or it's color or it's shape.

2. If apple dropped the iphone, it's stock price would drop like a stone. How do you think stevie gets paid?. Surely, not the $1 per year salary he pays himself. IF you don't think stevie likes owning a private jet and his own little island, think again.

3. In the agreement, i am sure apple is required to provide AT&T phones for the ENTIRE 5 years (or else AT&T lawyers should all be fired and sent to remedial law school). When one company signs an agreement to provide goods to another, they cannot just suddenly decide to stop providing goods. That's not how the real world works (might work in whatever college or high school you are attending but not in the real world with Billions of dollars at stake).

4. AT&T could sue apple for Billions. Why would apple be interested in potentially losing billions of dollars?.. so that you could have an unlocked phone?. you people make me laugh. Get a grip.

[shetline]

Originally Posted by wnurse

This is a dumb reply on many levels.

1. Apple agreement with AT&T is not dependent on the chips inside the iphone or the software version the iphone runs or it's color or it's shape.

While I agree that zanshin overstated his case by the way he said "any contract can be renegotiated at any time by the parties", it would be interesting to know just how much wiggle room Apple left itself in this contract. Unless I imagine that there is some room to maneuver, I find it difficult to imagine Apple letting itself get locked into a five-year contract with one and only one US carrier. Five years is an eternity in this business.

I'm sure Apple didn't manage to get away with being allowed to make trivial changes in the iPhone, call the result a different product, and declare it free from their agreement with AT&T. But did Apple actually go as far as offering exclusivity on every single phone they might develop over the next five years?

Can Apple stick to the strict letter of their agreement with AT&T, not shoot themselves in the foot, yet still perform so badly as far as meeting AT&Ts expectations that they force AT&T back to the table to renegotiate? Perhaps Apple has stipulated terms that AT&T might find hard to meet, and if AT&T doesn't succeed at meeting these terms, Apple can legitimately bail out of the deal?

[wnurse]

Originally Posted by shetline

While I agree that zanshin overstated his case by the way he said "any contract can be renegotiated at any time by the parties", it would be interesting to know just how much wiggle room Apple left itself in this contract. Unless I imagine that there is some room to maneuver, I find it difficult to imagine Apple letting itself get locked into a five-year contract with one and only one US carrier. Five years is an eternity in this business.

I'm sure Apple didn't manage to get away with being allowed to make trivial changes in the iPhone, call the result a different product, and declare it free from their agreement with AT&T. But did Apple actually go as far as offering exclusivity on every single phone they might develop over the next five years?

Can Apple stick to the strict letter of their agreement with AT&T, not shoot themselves in the foot, yet still perform so badly as far as meeting AT&Ts expectations that they force AT&T back to the table to renegotiate? Perhaps Apple has stipulated terms that AT&T might find hard to meet, and if AT&T doesn't succeed at meeting these terms, Apple can legitimately bail out of the deal?

Or apple could have said 5 years but if you meet certain profit target or maybe sales target, we can renegotiate. Remember, apple signed the deal before they sold an iphone and while they have sold an impressive number of phones, as someone noted, nokia sells the number of phones in 1 day that apple sold in 3 months.. so i doubt even if AT&T agreed to renegotiate, it's any time soon.

Also, i doubt apple could have stipulated AT&T reach some goal espicially since they are the one controlling the iphone distribution (you cannot activate without itunes, apple set the terms, sets the iphone price, updates the iphone, etc).. As a company, why would i agree to meet some target the other guy controls?. It's more likely the other way.. AT&T told apple if they met certain goals, they can renegotiate. I can see apple agreeing to something like that if they are confident they can meet sales target (hence perhaps why they dropped the phone price even though it was selling well). I seriously doubt AT&T lawyers are so stupid, they agreed to meet some sales target especially when apple controls the phone price (so there is no way AT&T can stimulate demand, they have to wait for apple to stimulate the demand, they cannot offer special services, they have to let apple offer special services, etc).. again, i understand we think steve is god and everyone worships at his feet but the people running AT&t are just as ruthless as Steve (how you think they got their position?) and just as smart (or even smarter) i might add.

BTW, this is obviously all just speculation. The 5 year deal could mean what it says.. a 5 year deal.