“Apple Inc. said that almost one out of every six iPhones sold may have been unlocked to run on unauthorized wireless networks, surprising analysts who had estimated the problem wasn’t as widespread,” Connie Guglielmo reports for Bloomberg.
“Chief Operating Officer Timothy Cook said yesterday that 250,000 of the nearly 1.4 million iPhones sold may have been bought by users with the intention of unlocking them, or modifying the device to work on a network other than AT&T Inc.’s,” Guglielmo reports.
“Customers who aren’t signing up with AT&T, Apple’s approved service provider in the U.S., are preventing the two companies from collecting monthly mobile-phone fees. Analysts had estimated that between 10,000 and 100,000 iPhones had been unlocked since Apple began selling the device in June,” Guglielmo reports.
“Some buyers have been purchasing five phones at a time at Apple stores in the U.S., modifying the software that locks it to AT&T’s service, and then reselling the unlocked iPhones overseas,” Guglielmo reports.
“Apple’s sales totals include phones that are in AT&T’s stores and warehouses and haven’t yet been handed to customers, AT&T spokesman Michael Coe said. ‘We do agree with Apple that the vast majority of phones that haven’t been activated on our network are going overseas,’ Coe said. In the U.S., the iPhone can only be altered to run on one other national wireless service, Deutsche Telekom AG’s T- Mobile USA.,” Guglielmo reports.
Full article here.
Phillip Elmer-Dewitt reports for Fortune, “One day after Apple trumpeted its quarterly sales of 1.12 million iPhones — for a total of 1.4 million sold so far — AT&T reported that it has activated 1.1 million of the devices. Most of the 300,000 gap between those two numbers, according to Apple, can be accounted for by iPhones purchased to be unlocked and used with another wireless service.”
Elmer-Dewitt reports, “Buried in Apple’s Q4 report yesterday was a $118 million line item called ‘iPhone and Related Products And Services,’ which is where the company tucked the proceeds from its revenue sharing deal with AT&T. Piper Jaffray’s Gene Munster, who’s been trying to unravel the terms of that deal ever since it was announced, estimates from the Q4 report that AT&T is sending Apple $18 per month per subscriber.”
Full article here.
Maybe Apple “gets it” now.
Goes to show Apple should have sold a multi-band unlocked iPhone from the very start.
AT&T;Stores don’t even have iPhones on display, don’t care and act like idiots if you want one.
So why bother? This is another “store within a store” mistake by Apple.
FREE THE iPHONE NOW!!
How many of them made their way to Canada? A buddy of mine is an IT guy for a home builder in Calgary, Alberta. Their corporate execs all wanted iPhones, so they plunked down their American MasterCards and purchased 5. The IT guys unlocked them to use with the Rogers network (the only network in Canada that runs GSM). Everything works– all the third party apps work. The ONLY thing that doesn’t work is visual voicemail as Rogers has not set up for that feature. We’re definitely starting to see them up here.
“…Goes to show Apple should have sold a multi-band unlocked iPhone from the very start.”
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Why? so we could have had a feature handicapped iPhone?
It’s easy to say that Apple should have sold the iPhone unlocked, and it sounds like a good idea until you really think about it and realize what Apple was up against with the carriers.
Walt Mossberg explains it best here:
….To my knowledge, only one phone maker, Apple Inc., has been permitted to introduce a cellphone with the cooperation of a U.S. carrier without that carrier having any say in the hardware and software design of the product. And that one example, the iPhone, was a special case, because Apple is currently the hottest digital brand on earth, with its own multibillion-dollar online and physical retail network,” Mossberg writes.
“Even so, Apple had to make a deal with the devil to gain the freedom to offer an unimpaired product directly to users. It gave AT&T;exclusive rights to be the iPhone’s U.S. network for an undisclosed period of years.
The bottom line is that we have no idea what the talks with Steve Jobs and the carriers entailed. But we do know that Apple “talked” with several different carriers and Verizon (if not all carriers) would not agree to Apple’s terms. Whether that was because of Apple wanting full control over development and network features, or because Verizon was not willing to pay the unprecedented monthly fee’s that Apple demanded, we will never know. But there are many valid reasons why an unlocked iPhone in the US market could never be what the iPhone is under exclusive contract with AT&T;
Hey Apple. Do you GET IT now?
People WANT unlocked phones.
• Buy the phone you want.
• Select the service provider you want.
This is the way the rest of the world operates.
Why must we, as paying servants… I mean… customers, be forced to select from a narrow range of phones and be locked into long term service contracts for that “priviledge”.
I bought an unlocked phone. I’ve had the “free” phones I’ve gotten from T-Mobile unlocked so I could use them abroad.
I don’t see why, with Apple’s marketing power, they didn’t just sell unlocked phones from the beginning. Clearly, that’s what people WANT!
I’m sure Apple want this to happen. They are tied to a five year agreement with ATT, but would probably love to have the use spread outside. They have to put in the appearance of trying to control it but will probably only go so far.
It’s totally mad that they are ‘locked’ in the bloody first place IMHO.
I wouldn’t mind an iPhone but there is no way I would change my provider for the phone alone, other factors like coverage and cost come in as higher importance.
In the Uk there is a whole bunch of providers, beats me why you would want to divide your potential client base by 5 or 6. It’s like having a computer than only works with AOL, madness I tell thee.
Loving mine in Mexico
I went through hoops to get one in early September, now they are being sold openly in cell phone stores, unlocked and with a TelCel simm for $600.00usd
I don’t think everyone is using them as a phone, but rather as a glorified wifi web surfing PDA and iPod. The iPhone, even not used as a phone, is much more than a iPod Touch, which is exactly what I need.
I need to take notes;
Full wifi email,
Safari,
PDA,
documents and spreadsheets,
I can’t use the phone here in Japan for some time to come, but I sure would like the advantages that it gives over ‘Touch!
Several people on the iPod forum want this very setup.
You’re all wrong. Micro$oft bought all 250,000 phones so they could copy the operating system.
MW: support-As in Apple will not support an unlocked iPhone!
No big deal. I’ve now replaced the SIM 3 times. Working great on any network I want. Apple doesn’t have to do anything. Freedom.
Apple did what they did to make more money, end of story. Apple doesn’t care what you want, only what Steve wants.
From Mexico to India to Philippines to Australia – they’re all over the world. Yeah, and a few in Redmond too – wired to the borg’s assimilation machines.
This whole “lock” thing represents a serious problem for Apple – it really makes the company seem paranoid, controlling, and greedy. I should be able to do anything I want with a product once I buy it and walk out of the store. Even though it’s literally illegal to drive 100 MPH in my new car, the manufacturers know that “locking” the speed limit to 65 MPH would be a public relations nightmare…as the iPhone lock has been for Apple. Although we agree to the terms of purchasing a product, we know that a public outcry can result in those terms changing. Apple learned this the hard way when they dropped the price of the iPhone – it wasn’t enough for them to simply say, “You agreed to the price when you bought it” – hence the $100 refund. For the sake of the stock price in the long term (I’m a stockholder), I hope Apple learned its lesson.
Get over it people.
You want an iPhone? You get AT&T;.
You don’t want AT&T;? You don’t get an iPhone.
Nothings gonna change until the exclusive agreement is up. So stop bitching about it.
As Tre’s above post pointed out, APPLE HAD NO CHOICE.
They wanted FULL CREATIVE CONTROL over the iPhone and it’s features. THE ONLY WAY THEY COULD DO THAT was to sign an exclusive deal with a carrier.
There’s another alternative to simply “Get[ting] over it” – complain until Apple changes the terms. It’s worked before – Apple said “Pay $599 or get over it.” Well, there was another option as we all saw.
If memory serves, when the “bricking” controversy came up a few weeks ago, Apple defenders on this forum said very few buyers were doing any unauthorized modifications. Does “a few” stretch out to mean “a few hundred thousand”? Can 21% of the buyers be termed “a few”?
@New York Rules.
It seems as though you are failing to comprehend what the term “EXCLUSIVE AGREEMENT” means.
Apple CAN NOT change the terms until their contract with AT&T;is up.
@MikeK
Get over it people. You want an iPhone? You get AT&T;. You don’t want AT&T;? You don’t get an iPhone.
That’s funny, not only do I have an iPhone, but I use it with T-Mobile. There’s no reason why Apple couldn’t have signed contract with both ATnT and T-Mobile, now is there?
” There’s no reason why Apple couldn’t have signed contract with both ATnT and T-Mobile, now is there?
__________________
Yes, there absolutely is..
When developing the iPhone, Apple insisted on having full creative control with no input from the carriers as well as demanding a cut of revenue from the carrier. The only way that any carrier would agree to these terms was if Apple signed an exclusive deal for an undisclosed amount of time.
Please read the post that Tre posted as well as the Walt Mossberg WSJ article that he quoted.
I wonder how many Microsoft employees are secretly using their iPhones behind the Redmond walls.
” Does “a few” stretch out to mean “a few hundred thousand”? Can 21% of the buyers be termed “a few”?”
Apple fanboys are not very good with math. They took the “Artistic” route.
Another way to look at it..
…. Essentially, Apple went to the carriers and said.
STEVE JOBS: Hey, were making the iPhone, it’s gonna be a great phone but we’re not gonna tell you what it can do. You have no say in what network features we choose to put on this phone. We want to sell this phone and use it on your network and we want you to pay us “X” amount of dollars per month for the privilege of having the Apple iPhone.
AT&T;: Well if we’re gonna put our faith in you and do an unprecedented deal of PAYING YOU MONEY every month, then you’ve got to give us something in return.
STEVE JOBS: What would that be?
AT&T;: An exclusive contract for “X” amount of years.
STEVE JOBS: Ok. Deal. But we’ve got One more thing…
AT&T;: What would that be?
STEVE JOBS: We’ve got this idea for a feature called Visual Voicemail. Make it work..
AT&T;: Okay, deal.
Do you get the picture yet?
@MikeK
Sorry, that’s not a good reason. Apple could still maintain “full creative control” even with contracts to two vendors. You can get RAZR phones for more than one carrier, too, so your argument doesn’t hold up.
@Math,
Apple fanboys are not very good with math. They took the “Artistic” route.
Gee, Math, 300000/1400000 = 21%.