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Quarter Million iPhones Purchased with Unlocking in Mind

By James Alan Miller
October 23, 2007

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During the conference call announcing its stellar financial results last quarter, Apple said it sold 1.11 million iPhones during that period, making it 1.39 million shipped since June’s launch. And, according to Apple COO Timothy Cook, a significant number of these iPhones, close to 18 percent, were bought by people intending to unlock them.

"Apple estimates 250,000 iPhones were sold with intention to unlock," Cooks said during the call. He didn’t say how Apple arrived at this number, however. It is likely they subtracted the number of iPhones activated from those shipped.

Although the iPhone is locked to AT&T's network, it is well known folks unhappy with that carrier, unwilling to switch to another operator, or living outside the U.S., have used third-party software to break AT&T's stranglehold on the iPhone. These solutions allow you to use the iPhone with any GSM carrier worldwide.

While there's been some conjecture about the number of unlocked iPhones, I don't think anyone expected it to be nearly so high.

You'd think Apple would be happy to move a quarter of a million extra iPhones in this manner. It isn't.

Apple's deal with AT&T is contingent on the carrier having the iPhone exclusively. Losing out on 250,000 potential customers greatly affects the operator-giant's bottom line. An unhappy partner is only going to give Apple headaches.

Also, perhaps more importantly from Apple's perspective, Apple gets an (unknown) percentage of AT&T's iPhone service revenue. That's the money subscribers spend each month for voice and data services. Meaning Apple stands to lose a good amount of cash for every unlocked iPhone.

Hence, Apple’s ongoing game of cat and mouse with hackers and owners of unlocked iPhones. Its latest firmware upgrade, version 1.1.1, either bricked unlocked iPhones, making them completely unusable, or re-locked them.

So what's Apple going to in the future? Why release future iPhone upgrades that do exactly the same thing this past one, it says.

The number of international iPhone unlocks should decrease in the coming months, as Apple starts to roll the smartphone out worldwide, starting with three European markets before the end of this year.

In one of these markets, France, Apple and its carrier-partner Orange is going to have to release both a locked and unlocked version of the iPhone to comply with French telecommunications law. The unlocked iPhone will be sold at a premium, of course.



Related Links:

  • A significant number of iPhones bought for use with carriers other than AT&T, the exclusive service
  • AT&T CEO Answers iPhone, Industry Questions
  • Apple Finally Opens Up iPhone to 3rd Party Software
  • Update: Orange France to Launch Locked and Unlocked iPhones
  • Apple's Tug of War Over iPhone Software

     
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