There are three issues here, that are upsetting:
A) the collusion of device makers with content/service providers, i.e. market manipulation
In the good old days Apple was a hardware manufacturer that also made an OS for its machines, but in essence tried to get the most functionality to its customers. Apple's and its customer's goals were nearly identical. Apple provides value, people pay for it, Apple makes a profit, people have utility. Basic free market economics as libertarians make us believe are applicable to all scenarios, which is why there should be no government market regulatory action. If that's all there were, they would be right.
Now, welcome to the new world of "strategic partnerships". A strategic partnership is a way for two or more companies to work together in a way as to put their competition at a disadvantage and to suck more money out of consumer's pockets without providing more value.
The first of these examples started with the iTunes music store. While it's main purpose has been to drive iPod sales, the influence the content providers gained over Apple in the process resulted in several aspects of the audio and video capabilities of Mac OS X being crippled "to fight copyright infringement". The "strategic partnership" resulted in Apple turning from device manufacturer that has the user in mind to a policing force for the record industry. Funnily enough, content producers now need to hack the Mac in order to do certain things that would be natural. As a result, you need to install things like SoundFlower and Audio HiJack Pro to get some of the most basic things done, and you introduce additional latency in your audio workflow (I know, I work with this stuff).
With the iPhone it gets even worse: the iPhone isn't locked to "ensure quality" as Apple claims, and even if it were, it's not Apple's business to ensure quality of third party apps, after all, they still work with Adobe, which in close to ten years of Mac OS X still has not managed to release a version of their Creative Suite that runs on a case-sensitive file system, despite Apple telling developers over and over not to rely on HFS+ being case-insensitive (e.g. HFSX is case-sensitive). No, the iPhone is locked, such that Apple can not only make a hefty profit on selling hardware, but also force third parties into "strategic partnerships" e.g. when it comes to selling game software. The result will be that Apple earns money on software it didn't write, and that you the consumer will end up paying more for that software (because the software authors will not give up their share), and have less choice (because Apple can be selective in whom they deal with). The pretense will likely shift from "ensuring quality" to "preventing piracy" as time goes on.
What's next? Trusted Computing, subscription computing and licensing models as hardware matures and frequent hardware updates by consumers can't be counted on anymore. The point is, to suck money out of your pockets on a periodic basis, regardless if you want it or not, by artificially structuring services and devices in such a way that you have to rely on a subscription contract to have a working device. Therefore the iPod Touch does not have full audio capabilities, and that's why there's no VoIP client software in the iPhone, even though it would be trivial to do so. (God forbid, someone make free calls over the internet!)
(For more on trusted computing and why it's the beginning of the end, read here: Trusted Computing FAQ
So back to the iPhone: the way it gets to be "locked" has directly to do with Apple trying to get money at every corner for doing nothing, instead of being satisfied with making money on the sale of a device and by selling occasional software updates, AppleCare contracts, and music on iTMS. They want to make sure NOTHING happens on the iPhone unless they make money, and they use trusted computing type techniques to enforce that policy, strongly diminishing competition and increasing the total cost of ownership for users.
B) gadgets are less and less hardware, and more and more software, i.e. general purpose computers in different form factors
In old times, you made an electronic device, and that was it. It was hard wired.
Today, everything is software. Even radios become software controlled. Maybe the next generation of the iPhone has a software controlled radio, and can be upgraded to new wireless standards simply by a software update.
The iPhone itself, is simply a scaled down Mac that in terms of computing power and storage capacity likely outruns a clamshell iBook from a few years ago. It's simply shrunk to a size that fits your pocket and it has built-in cellular networking peripherals. It is a Mac, it runs Mac OS X.
If you buy a Mac, and Apple said you can only run Apple apps on it, and you can't write software yourself, and you can't run anyone else's software on it, unless they make a deal and pay us 25% of gross sales of all they sell, wouldn't you be upset? Well, that's exactly what's happening with the iPhone.
Worse, it's supposed to be a killer phone. Yet all the Nokia and Sony-Ericsson Symbian S60 based phones have 3rd party software on them. All the PalmOS products have third party software on them, yet the pocketMac, nee iPhone, the most potent of all these devices, it is supposed to be crippled to fatten Apple's bottom line and limit what users can do?
Example: I have 1.0.2 software iPhone, with a terminal emulator on it. I will not give that up. I can log in from anywhere into our servers, restart services, start backups, reboot the machines, etc. in a pinch, and that is worth to me a lot more than that stupid wireless iTMS.
Preventing a general purpose computer to be used as what it is, is a way of forcing additional product sales, and it takes its toll on the environment and enforces the wasteful nature of our economy. Instead of squeezing the most utility out of a given resource, we are limited in what we can do, and forced to buy additional products (waste more resources) to get the job done.
Apple is NOT GREEN.
C) International travel, and consumer choice of carriers
Every AT&T phone you get, you can get a "courtesy unlock" for if you have been with AT&T for a while and plan to travel internationally. This allows you to use cheap local prepaid SIM cards overseas, rather than pay outrageous international roaming fees. The contract between Apple and AT&T, and the sole control over the software by Apple, prevents even such courtesy unlocks. This means you have to buy a second phone for travel, and leave behind your contacts, calendars, etc. or you pay outrageous fees while traveling.
Further, part of keeping service providers in check, is the ability to switch when having received unsatisfactory service. This applies even in the case of early termination fees, because these fees do not apply if the service provider fails to provide proper service and that's the reason for contract cancellation.
But if AT&T doesn't provide proper service, you're now the proud owner of a fully paid (not AT&T subsidized) $400 door stop. You can't bring your phone to another carrier, as you can do with any other phone that you buy on the open market and isn't carrier subsidized.
This has nothing to do with warranties, license terms, quality, etc. It has everything to do with Apple trying to control and squeeze the consumer beyond ethical boundaries, being more concerned with its own greed than with the inefficiency and waste that results. We should all be paying drones, and not people in control. Does anyone still remember the 1984 Apple ad? Yes, now the Apple users are the people in grey, marching, and watching to Steve Jobs preaching on the screen. Maybe a Penguin comes running in and hurls an Open MoKo Neo 1973 phone
at the screen to blow up things and liberate the poor iPhone sods, myself included.