Unlocked iPhones may total 1 million, see help from insiders

[AppleInsider]

A new report claims that between 800,000 and 1 million iPhones have been unlocked without permission -- and that workers involved in producing the Apple handset may be helping along a blossoming gray market for the device.

In its investigation, BusinessWeek claims sources who appear to validate financial analysts' fears, with as much as 25 percent of all iPhones reportedly in the hands of customers that have modified their phones rather than activate them with AT&T, O2, Orange, or T-Mobile Germany.

The numbers are this high in large part due to the relatively quick creation of a hardware-based unlock by the Czech firm Bladox, according to the magazine. In August of last year, the company developed a variant of its Turbo SIM card that turned from handling mobile payments to fooling the iPhone into believing it was running an activated, officially sanctioned SIM card from AT&T.

This and more software-dependent techniques have let bootleggers sell the phones both to Canadians and similarly obvious candidates but also countries as far ranging as Afghanistan, according to Bladox.

However, the situation may only be made worse by the ecosystem used to handle iPhones both during and after their transit from Asia to their final sales destinations in the West. An unnamed distributor claims to know a supplier with access to diagrams and repair guides that would normally be available only to Apple, hinting at leaks either within the supply chain or at the factories themselves.

In the US, iPhone sent to phone recycling and refurbishing houses such as Cellucom Group are often shipped to wholesale outlets that fix and promptly sell unlocked versions of the once-discarded devices.

Apple and its official carrier partners have also done little to stem the tide, the report argues. Nonetheless, lost carrier income is described a non-issue; many unlocked iPhones are sold in countries where no official providers exist.

In its latest quarterly results, Apple was comparatively relaxed in its approach to investment firms' concerns about iPhone unlocking. The firm's chief operating officer Tim Cook said during a conference call that the number of unlocked phones was "significant" but could not say how many were operating on unapproved networks, also stating that it was an "expression of strong interest" in the device around the world. Analysts have also noted that Apple may incidentally benefit from the unofficial trade by generating enthusiasm for the products it does sell in these countries.

In fact, most of the help provided to the Cupertino, Calif.-based company in slowing down gray market sales may be from circumstances beyond its control. The international 1.1.1 iPhone firmware update is claimed to have unintentionally broke SIM card hacks but was ironically helped along by the development of strictly software-based workarounds to the problem, which hurt traffic at resellers who depended on hardware solutions for their businesses.

[solipsism]

Once a 3G version hits this is thing si going to go crazy. I predict 8-10M units sold in the first 6 months of it being released.

[Foo2]

Originally Posted by solipsism

Once a 3G version hits this is thing si going to go crazy. I predict 8-10M units sold in the first 6 months of it being released.

If $499 or less and the data plan doesn't increase, I'd say 10M is a conservative estimate.

[echosonic]

Originally Posted by Foo2

If $499 or less and the data plan doesn't increase, I'd say 10M is a conservative estimate.

agreed.

only 16 months until ATT exclusivity expires.....

[dagamer34]

Since a 3G iPhone is unlikely to work on T-Mobile, you'll probably see more people switch to AT&T once their contract is up. I know I am.

[mwgum]

Originally Posted by echosonic

only 16 months until ATT exclusivity expires.....

When have they said how long the exclusivity lasts? I thought that it was "multi-year" agreement with no specific time announced.

[nothowie]

Apple wants people to buy and unlock the iphone, at least if they live in an area where the iphone
is not presently available to be activated on a network.

The reason for this is Apple makes money on each iphone they sell. They, of course, would like the iphone to go to a country where they have a contract to offer service, but a sale is a sale if they make money on it. This would be more of an issue if Apple lost money on the sale price and were relying on payments from carriers for all the profit.

Another reason why I think Apple is OK with the unlocking is that if they wanted to discourage it they would charge a couple hundred dollars more for the iphone and provide a rebate when you activated the phone with an approved carrier. That way, you'd keep the price the same for those that kept the phone locked and make more on those that unlocked the phone..but I think they don't want to discourage unlocking, which would result in lower total sales. Also, using an iphone leads to other Apple purchases just like ipod sales have helped mac sales. A good experience with the iphone, which an overwhelming majority of users are reporting experiencing, means increased awareness and appreciation of Apple products.

[solipsism]

Originally Posted by mwgum

When have they said how long the exclusivity lasts? I thought that it was "multi-year" agreement with no specific time announced.

Verizon said Apple offered a 5 year agreement. That seems the most likely to me. The 24 month agreement seems to be people confusing the consumer AT&T contract with the contact Apple and AT&T have.

[Matthew Yohe]

Originally Posted by echosonic

agreed.

only 16 months until ATT exclusivity expires.....

If you are talking about the contract for AT&T to exclusively tie the iPhone to its network in the United States, then we are actually looking at around 52 months. The original agreement was for 5 years.

I know many people would like grab an iPhone and use it on a different network, but I just cannot imagine losing visual voicemail.

I guess it's an easier to purchase an iPhone knowing you won't use visual voicemail than using it and having to let it go.

[Rot'nApple]

Originally Posted by nothowie

Another reason why I think Apple is OK with the unlocking is that if they wanted to discourage it they would chage a couple hundred dollars more for the iphone and provide a rebate when you activated the phone with an approved carrier. That way, you'd keep the price the same for those that kept the phone locked and make more on those that unlocked the phone..but I think they don't want to discourage unlocking, which would result in lower total sales.

Just a thought...

About another reason Apple is okay with the unlocking is that they don't come out fast and furious with iPhone software updates that will only break the hacked phones. I'm not talking about updates that increase functionality or improve current iPhone abilities, but rather a "hidden little change" in software code or something to that effect that is put in to irritate the hell out of people who have iPhones on service plans other than Apples partners or places where by law Apple is forced to sell unlocked phones. It would drive Jailbreak apps developers crazy if they had to find this code modify and update their product, only to have to go through the process again and again. If Apple kept modifying their software on a monthly pace that kept hackers on their toes, it would then be a test of wills.

However, since Apple has only released three firmware updates to the iPhone since it's release, they are not actively persuing all options available to them to disuade iPhones from operating on unauthorized networks.

It looks as if the hackers and jailbreakers have won the test of wills and only have to contend with the occassional iPhone firmware update that will break their current hack unless they wait to download the revised hack / Jailbreak app to keep their phones running smooth.

[aresee]

If it was a test of wills.

[JeffDM]

Originally Posted by Matthew Yohe

If you are talking about the contract for AT&T to exclusively tie the iPhone to its network in the United States, then we are actually looking at around 52 months. The original agreement was for 5 years.

I know many people would like grab an iPhone and use it on a different network, but I just cannot imagine losing visual voicemail.

I guess it's an easier to purchase an iPhone knowing you won't use visual voicemail than using it and having to let it go.

In the US, there's not much of an alternative carrier, that alternative has less coverage and a rep for worse customer service. Elsewhere, I think it's first a matter of whether it's available "white market", and maybe second, whether you agree with the available plans.

[TheIguana]

Just another example of why locking phones to certain carriers is a bad idea. It is a fruitless battle that only ends with the locking techniques being busted wide open. It's just like the DRM battle except it has been going on since the advent of the mobile phone.

[teckstud]

I live in NYC and right on Madison Ave a store has a sign outside stating that they sell unlocked iPhones.

[4metta]

Originally Posted by echosonic

agreed.

only 16 months until ATT exclusivity expires.....

Really? I heard 2012. Gawd I hope Apple gives the iPhone to other carriers soon.

[TenoBell]

Just another example of why locking phones to certain carriers is a bad idea. It is a fruitless battle that only ends with the locking techniques being busted wide open. It's just like the DRM battle except it has been going on since the advent of the mobile phone.

Apple has described the unlocking problem a good problem. It shows how much demand their is for the product.

The article states Apple isn't doing nearly as much as it could to stop iPhone unlocking.

[sapporobaby]

As timely as this article may be, it is in effect old news. We all know that Apple is paying lip service to AT&T with the re-locking upgrades. Every iPhone that gets sold, is money in the pocket for Apple. Apple has about as much loyalty to AT&T as they do to each and every consumer of their products. It all about money. Not friendship. Buy a phone and hack it, Apple gets paid. Too bad AT&T? How desperate was AT&T to go into this deal in the first place? Several other carriers walked away from Apple; 1. because they did not like the revenue sharing model, 2. Their networks were better and they were not in the red, 3. Legal reason (In Finland, it is illegal to have a phone tied to a subscription without 3G). The 3G iPhone and hopefully better functionality. Time will tell.

[elroth]

Originally Posted by aresee

If it was a test of wills.

If it were a test of wills.

[lostkiwi]

I have seen heaps of unlocked iPhones in Russia and Dubai. They are not exactly hard to get..

[jmadlena]

Originally Posted by sapporobaby

...Buy a phone and hack it, Apple gets paid. Too bad AT&T?...

I think Apple does care. Even if it is only a little. They have a revenue sharing model, so by people not using AT&T they are losing some amount of money. That's why carriers give phones away, because it's the contract that makes the money (maybe not in the iPhone's case, because it isn't a cheap little free phone). They might not be able to do a lot, but they are losing money, and they know that.

[mdotcheung]

Rot'n'Apples,
I think the hacking community can already break the firmware updates within afew weeks, not months, so sadly your suggestion of monthly updates wont help on that part. Sony's PSP also had very regular firmware updates, but that just made hackers stick to the most open firmware (fw1.50) or even use custom firmware instead of the official ones.
What I think Apple really needs to do, is address the needs of what hackers provide, even some basic things like Copy & Paste, forwarding text messages, MMS and Bluetooth file transfer. They've done well for fw1.1.3, by adding in multi-recipient SMS, disk storage facility, and voice recording (i think, not sure).
I'll be honest and admit I have a hacked 1.1.1. iPhone, but after messing around with lots of apps, most of what I keep are just used to cover what most think should be basic functionality from Apple (SMSD, Search, ToDoList, VNotes, SendSong). If Apple could integrate these functions and those mentioned above into an official firmware, and as long as I can continue to use my HK sim card, i would be very happy to keep it at that offical firmware.

[fraklinc]

well i think that as soon as the SDK is release the baseband will be nearly impossible to break. unlocking does not hurt AT&T at all, why??? cause they pay apple $200 for each iphone activate just like they pay any store retailer for any other phone. so every unit sold to unlockers, its $200 apple loses and when it hits the 1 million unlock units, they will had loss $200 Million. it might get ugly also cause out of the 200 mil, about 60 should have whent to uncle sam, so if apple does nothing uncle sam might unleash hes boys on the unlocking community to make sure he gets his cut next time

[sapporobaby]

Originally Posted by mdotcheung

Rot'n'Apples,
I think the hacking community can already break the firmware updates within afew weeks, not months, so sadly your suggestion of monthly updates wont help on that part. Sony's PSP also had very regular firmware updates, but that just made hackers stick to the most open firmware (fw1.50) or even use custom firmware instead of the official ones.
What I think Apple really needs to do, is address the needs of what hackers provide, even some basic things like Copy & Paste, forwarding text messages, MMS and Bluetooth file transfer. They've done well for fw1.1.3, by adding in multi-recipient SMS, disk storage facility, and voice recording (i think, not sure).
I'll be honest and admit I have a hacked 1.1.1. iPhone, but after messing around with lots of apps, most of what I keep are just used to cover what most think should be basic functionality from Apple (SMSD, Search, ToDoList, VNotes, SendSong). If Apple could integrate these functions and those mentioned above into an official firmware, and as long as I can continue to use my HK sim card, i would be very happy to keep it at that offical firmware.

I could not agree more. After installing tons of apps on my iPhone I have come back to the basics. I pretty much have on it what my Nokia N82 has. These are the functions that Apple needs to address. Do this and and let the phone be unlocked and I would gladly pay a bit more for these features.

[sapporobaby]

Originally Posted by fraklinc

well i think that as soon as the SDK is release the baseband will be nearly impossible to break. unlocking does not hurt AT&T at all, why??? cause they pay apple $200 for each iphone activate just like they pay any store retailer for any other phone. so every unit sold to unlockers, its $200 apple loses and when it hits the 1 million unlock units, they will had loss $200 Million. it might get ugly also cause out of the 200 mil, about 60 should have whent to uncle sam, so if apple does nothing uncle sam might unleash hes boys on the unlocking community to make sure he gets his cut next time

I think you are wrong about the baseband. There is now a software unlock for up to version 1.1.3. Geohot performed this about a week ago.

I would love to see Apple's and AT&T's sales figures just for this week alone.

[TenoBell]

Too bad AT&T? How desperate was AT&T to go into this deal in the first place? Several other carriers walked away from Apple; 1. because they did not like the revenue sharing model, 2. Their networks were better and they were not in the red,

You are exaggerating the issue. ATT is perfectly happy with its iPhone deal. This past quarter set a record for the most new customers to sign to a carrier and huge profits for ATT.

I guarantee those carriers that walked away from the iPhone would leap for joy at the chance if Apple offered it to them again.

[sapporobaby]

Originally Posted by TenoBell

You are exaggerating the issue. ATT is perfectly happy with its iPhone deal. This past quarter set a record for the most new customers to sign to a carrier and huge profits for ATT.

I guarantee those carriers that walked away from the iPhone would leap for joy at the chance if Apple offered it to them again.

Actually that is not a guarantee that you can make. I could say that same in that I can guarantee that those who walked away are happy they did not make the deal with Apple. Plus-minus=zero. I am sure that AT&T is happy because they needed the money. Considering that China Telecom (not sure of the proper name) did not leap at this wonderful deal and arguably they have about the largest potential phone market on the planet. But once again, this is all speculation. Sure Apple gets more from a paid subscription to AT&T but if between the choices of no money and full price for a new iPhone that will later be unlocked, Apple will naturally take the money for the unlocked iPhone.

[nvidia2008]

Originally Posted by TheIguana

Just another example of why locking phones to certain carriers is a bad idea. It is a fruitless battle that only ends with the locking techniques being busted wide open. It's just like the DRM battle except it has been going on since the advent of the mobile phone.

I agree. The issue here is that locking phones and DRM creates a lot of inefficiencies. When you have mass pirating of music and movies, okay some DRM may be the "obvious" solution. Though, not necessarily a good solution, as it is well known. In terms of selling locked phones, that locking does not make sense *at all* to a wide array of people.

Originally Posted by AppleInsider

...In its investigation, BusinessWeek claims sources who appear to validate financial analysts' fears, with as much as 25 percent of all iPhones reportedly in the hands of customers that have modified their phones rather than activate them with AT&T, O2, Orange, or T-Mobile Germany....

Financial analysts' fears? Only those that are betting heavily on the telcos/carriers. Nothing to worry for Apple. 25% is now probably a low-ball figure.

I'm estimating 33% of all sold are being unlocked. Of Unlocked, 90% going to Asia, Africa, Middle East, Australia, New Zealand.

So let's say Apple hits 5 million iPhones sold worldwide soon, that's 1.5 million unlocked.

By end of June 2008, say 10 million iPhones sold worldwide (particularly with 16GB... 3G???)... That puts the figure at over 3 million sold unlocked. I think the figure will be then, by June 2008, 10 million iPhones, 4.5 million of which sold unlocked.

(Sold unlocked as in never activated on the "proper" network, cracked by user or dealers or others)

[nvidia2008]

Originally Posted by sapporobaby

Actually that is not a guarantee that you can make. I could say that same in that I can guarantee that those who walked away are happy they did not make the deal with Apple. Plus-minus=zero. I am sure that AT&T is happy because they needed the money. Considering that China Telecom (not sure of the proper name) did not leap at this wonderful deal and arguably they have about the largest potential phone market on the planet. But once again, this is all speculation. Sure Apple gets more from a paid subscription to AT&T but if between the choices of no money and full price for a new iPhone that will later be unlocked, Apple will naturally take the money for the unlocked iPhone.

I have similar sentiments.

I have said, time and time again. Apple is having its cake, and eating it, and having fun with it American-Pie (the movie) style.

No carrier = Apple sells iPhone = Good for Apple
Carrier = Apple sells iPhone + Apple gets revenue share = Good for Apple

Sold to random dude that then sells it to another
random person who unlocks it and then sells it in
Singapore = Apple sells iPhone = Good for Apple

It's pretty obvious now. That said, I hate telcos with a passion, and I generally like Apple.

I see people using unlocked iPhones from around the world that seem happy.

Maybe this is the "counterculture" I can be part of now...

Yeah dude, cracking teh iPhone. I am teh 1337 h^x00Rs...

[sapporobaby]

Originally Posted by nvidia2008

I agree. The issue here is that locking phones and DRM creates a lot of inefficiencies. When you have mass pirating of music and movies, okay some DRM may be the "obvious" solution. Though, not necessarily a good solution, as it is well known. In terms of selling locked phones, that locking does not make sense *at all* to a wide array of people.



Financial analysts' fears? Only those that are betting heavily on the telcos/carriers. Nothing to worry for Apple. 25% is now probably a low-ball figure.

I'm estimating 33% of all sold are being unlocked. Of Unlocked, 90% going to Asia, Africa, Middle East, Australia, New Zealand.

So let's say Apple hits 5 million iPhones sold worldwide soon, that's 1.5 million unlocked.

By end of June 2008, say 10 million iPhones sold worldwide (particularly with 16GB... 3G???)... That puts the figure at over 3 million sold unlocked. I think the figure will be then, by June 2008, 10 million iPhones, 4.5 million of which sold unlocked.

(Sold unlocked as in never activated on the "proper" networked, cracked by user or dealers)

Just a rough calculation:

1.5 iPhones x $399.00 (suggested price of US iPhone) = $598,500,000 = Smiling Steve Jobs

By the way, I am more than sure that Apple saw this unlocking, locking issue coming on the horizon.

[aresee]

Originally Posted by nvidia2008

IBy end of June 2008, say 10 million iPhones sold worldwide (particularly with 16GB... 3G???)... That puts the figure at over 3 million sold unlocked. I think the figure will be then, by June 2008, 10 million iPhones, 4.5 million of which sold unlocked.

Now lets see ....
3 million phones,
200 a piece upfront money from the carrier (from an earlier post)
plus a monthly fee for 24 months -- lets say $10 a month for easy math

Thats $440 per phone, or 1 billion 3 hundred and 20 million dollars in lost revenue. Yep, the financial people would have reason to be upset.

* I am wrong in my numbers, but we are talking about big bucks here.

[sapporobaby]

Originally Posted by aresee

Now lets see ....
3 million phones,
200 a piece upfront money from the carrier (from an earlier post)
plus a monthly fee for 24 months -- lets say $10 a month for easy math

Thats $440 per phone, or 1 billion 3 hundred and 20 million dollars in lost revenue. Yep, the financial people would have reason to be upset.

* I am wrong in my numbers, but we are talking about big bucks here.

I just realized something. For the most part, all of us seem to agree that the only real winner in this is Apple. They get paid no matter what. AT&T can build a 4G network and it really will not matter if people churn (go to other networks). The only winners in this war are the equipment guys, which Apple happens to be. They will sell their 3G phones and get paid. Sure they could generate additional revenue by sticking to one operator but as they say, "a bird in the hand". Apple is playing for the cash that they can see with each and every sale. There is no guarantee that AT&T will maintain the numbers they hope to generate, but Apple knows it will get paid for every iPhone sold.

[cbwright]

Originally Posted by aresee

Now lets see ....
3 million phones,
200 a piece upfront money from the carrier (from an earlier post)
plus a monthly fee for 24 months -- lets say $10 a month for easy math

Thats $440 per phone, or 1 billion 3 hundred and 20 million dollars in lost revenue. Yep, the financial people would have reason to be upset.

* I am wrong in my numbers, but we are talking about big bucks here.

You're missing a crucial point. The vast majority of unlocked phones would never have been legitimate sales if unlocking weren't an option as many are going abroad. Only a small percentage of unlocked handsets are in use in official iPhone countries, and of these, although some may have wanted the iPhone 'at any cost', surely they would just pay the official price anyway? Even in official countries, those with the iPhone unlocked are those unwilling to pay the official price or to be locked in to an 18 month agreement - they would have simply purchased a different phone if they couldn't have unlocked an iPhone.

So unlocking IS win-win for Apple. Better receive a lower amount for a phone that will then be unlocked than receive nothing because the purchaser decided to buy something actually available in their country, or something cheaper in an official iPhone country.

[hobBIT]

Originally Posted by JeffDM

In the US, there's not much of an alternative carrier, that alternative has less coverage and a rep for worse customer service. Elsewhere, I think it's first a matter of whether it's available "white market", and maybe second, whether you agree with the available plans.

Unlocking is definitely a non-US topic. Not unlocking in the US is probably a no brainer as there aren't really alternatives. So most iPhones used in the US are probably not unlocked.

Internationally, that's a whole different story.

As was mentioned before you can buy heaps of iPhones in Russia. Even in Vietnam over Christmas I saw quite a few shops selling iPhones. They even advertise iPhones in magazines and on TV in Vietnam! Of course all those are unlocked as there is no official carrier in either Russia or Vietnam.

In London when you walk down Oxford Street you see at least a dozen billboards advertising 'We unlock your iPhone', 'Get your iPhone unlocked here', etc. When the iPhone launched in November and even during December those kind of billboards did not yet exist.

This tells me two things:
a) The iPhone does sell well.
b) There is a huge market for unlocking iPhones.

I'd actually be surprised if it was just 1 million phones that are unlocked.
In London you see quite a lot of people using an iPhone - even though O2 reportedly only sold some 70.000+. I would guess the unlocked figure is at least as high if not higher.

[palegolas]

Originally Posted by sapporobaby

I just realized something. For the most part, all of us seem to agree that the only real winner in this is Apple. ...

Well, Apple is the biggest winner here, no matter what. The more the iPhone spreads around the world, the better. Sure, Apple get paid for mobile usage with the official operators, but in terms of publicity, Apple is a bigger winner with unlocked phones in as many regions as possible.
That said... hasn't there been several reports showing that the operators benefit from this unusual relationship as well? AT&T has increased their user base significantly, regardless of 25% being sold unlocked. I think it's a little off to say that the operators are loosing money due to the selling of unlocked phones. No, they benefit as well. Allt kinds of buzz the iPhone generates most certainly generates interest in the official way of purchasing the phone.

Apple's only way of dealing with the unlocking situation is to compete with the unlockers. To speed up the distribution plan, sign with partners around the world and get it out there with great prices and services.. and perhaps loosen up a little on the locked operator stance...

[t.lo]

Originally Posted by AppleInsider

Nonetheless, lost carrier income is described a non-issue; many unlocked iPhones are sold in countries where no official providers exist.

That's BS. I know lots of people in Germany with an iPhone and NONE OF THEM has an official T-Mobile contract. There's a whole cottage industry now of people who simply buy the iPhone in the US at Apple Stores without a contract to sell it unlocked via eBay for prices as high as 700 Euros! Loads of people just buy the iPhone while on holiday or business trip in the US. This saves you 130 € due to the low dollar value. The O2 deal in the UK is a much better value than T-Mobile in Germany. If they don't lower their rates they will never sell any iPhones here.

[marmotton]

Originally Posted by solipsism

Once a 3G version hits this is thing si going to go crazy. I predict 8-10M units sold in the first 6 months of it being released.

Agreed. I am indeed waiting for that version to switch us to iPhones. The first version just did not have enough hard drive capacity (to justify as my old iPod replacement). With 16GB it is now better. Of course 32GB would be even better and I would certainly get that version if it existed. But this is no longer a show-stopper at 16GB.

Some remaining problems: poor digital camera resolution, no data storage capability (like Palm), forced to move to AT&T (my current T-mobile contract does not have data so they would force me to re-sign with them for God knows how long to change my contract, which, of course, I will not do), no FLASH support.

3G would be nice to have but it's not worth it/necessary: In the US cell phone service is stuck in the stone age and I don't expect that to change anytime soon.

I expect the FLASH support, data storage capabilities to be solved when the iPhone is open to third-party developer. But I have see it before $1,000 on hardware and switch to AT&T (which makes me cringe just thinking about it).

[marmotton]

Originally Posted by palegolas

Well, Apple is the biggest winner here, no matter what. The more the iPhone spreads around the world, the better. Sure, Apple get paid for mobile usage with the official operators, but in terms of publicity, Apple is a bigger winner with unlocked phones in as many regions as possible.
That said... hasn't there been several reports showing that the operators benefit from this unusual relationship as well? AT&T has increased their user base significantly, regardless of 25% being sold unlocked. I think it's a little off to say that the operators are loosing money due to the selling of unlocked phones. No, they benefit as well. Allt kinds of buzz the iPhone generates most certainly generates interest in the official way of purchasing the phone.

Apple's only way of dealing with the unlocking situation is to compete with the unlockers. To speed up the distribution plan, sign with partners around the world and get it out there with great prices and services.. and perhaps loosen up a little on the locked operator stance...

I regard the entire situation as beneficial to everyone: It helps create a healthier, free market competition in the rigid/socialist-like cell phone market. These cell phone operators are all trying to lock customers in so that they can charge them the maximum amount of money without providing any value. They have done that for years and upset so many customers that now it's pay-back time. They only did this to themselves.

Now if they only offered a little value that would compel people to move to their networks it would be a different story. AT&T has a special voicemail capability that you don't get if you are not on their network. That's a start. But otherwise I still think they do not do enough at least here in the US (their coverage is perceived to be poorer than Verizon's for example).

As for other countries, I think this is more of a problem with the local providers and Apple: had local providers supported the iPhone earlier and Apple opened launched in many more countries, they would have captured the early adopter contracts/revenues (Or at least some portion of them). They are now in a situation where even if they sign in with Apple, they may never get these customers and that initial early adopter income/subscribers. This makes an exclusive contract with Apple much less lucrative and makes it harder for Apple to find them.

It's now a situation where the operators have little to gain by signing in with Apple. If they are the only GSM operator in the country, they are already guaranteed these customers, so why share revenue with Apple? If there are more GSM operators than one, they may just silently make sure they networks are iPhone-friendly and keep their customers that way. That hurts Apple more because they can't sell unlocked phones locally by fear of seeing them ending up in the grey market somewhere else.

At this point I am wondering whether it would not be better for Apple to just offer an unlocked version of the iPhone and work with AT&T to offer some uniquely valuable services which would make AT&T a better network to use the iPhone with. This might just be just as lucrative for everyone.

[Hugo44]

I agree!! I myself would never buy a contract for the iPhone, I don't make that many calls and I don't use messaging a lot. I did buy the iPod touch and I'm happy with that. If I could buy an unlocked iPhone with a sensible array of functionality, and without the risk of staying on a low level without future upgrades, I would probably buy one. But I'm not too bothered with taking my Nokia with me. So I think the market for locked or unlocked iPhones is complemental, which means Apple now sells many more iPhones, and they are making money on them.

[ascii]

I don't know why Apple partnered with the carriers. If it was to ensure unlimited data plans existed, then they were only partially successful because the carriers did it, but just passed the cost on to the customer.

If it was to provide additional features, such as visual voicemail, I'm sure these could have been implemented another way. For example if you try to call an iPhone and it's unavailable the callers phone leaves a voicemail on an Internet server at Apple, which all iPhones log in to and check.

If it was to cover the cost of software updates, they could have just sold the updates through iTunes. Overall, the partnering with carriers didn't really amount to much from a customer perspective.

[ncee]

Post a picture … I think it would be a great post for folks

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