Unlocked iPhones may total 1 million, see help from insiders

Posted:
in iPhone edited January 2014
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.
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Comments

  • Reply 1 of 73
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 2 of 73
    foo2foo2 Posts: 1,077member
    Quote:
    Originally Posted by solipsism View Post


    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.
  • Reply 3 of 73
    Quote:
    Originally Posted by Foo2 View Post


    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.....
  • Reply 4 of 73
    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.
  • Reply 5 of 73
    Quote:
    Originally Posted by echosonic View Post


    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.
  • Reply 6 of 73
    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.
  • Reply 7 of 73
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by mwgum View Post


    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.
  • Reply 8 of 73
    Quote:
    Originally Posted by echosonic View Post


    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.
  • Reply 9 of 73
    Quote:
    Originally Posted by nothowie View Post


    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.
  • Reply 10 of 73
    areseearesee Posts: 776member
    If it was a test of wills.
  • Reply 11 of 73
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by Matthew Yohe View Post


    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.
  • Reply 12 of 73
    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.
  • Reply 13 of 73
    teckstudteckstud Posts: 6,476member
    I live in NYC and right on Madison Ave a store has a sign outside stating that they sell unlocked iPhones.
  • Reply 14 of 73
    4metta4metta Posts: 365member
    Quote:
    Originally Posted by echosonic View Post


    agreed.



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





    Really? I heard 2012. Gawd I hope Apple gives the iPhone to other carriers soon.
  • Reply 15 of 73
    tenobelltenobell Posts: 7,014member
    Quote:

    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.
  • Reply 16 of 73
    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.
  • Reply 17 of 73
    elrothelroth Posts: 1,201member
    Quote:
    Originally Posted by aresee View Post


    If it was a test of wills.



    If it were a test of wills.
  • Reply 18 of 73
    I have seen heaps of unlocked iPhones in Russia and Dubai. They are not exactly hard to get..
  • Reply 19 of 73
    Quote:
    Originally Posted by sapporobaby View Post


    ...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.
  • Reply 20 of 73
    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.
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