“Smuggling iPhones has become a lucrative, if legally questionable, way for traveling students and flight attendants to earn a bit of extra cash. An iPhone costs $499 plus tax in the U.S. — call it $550. Unlock it, for $50 or less, and you can sell the same phone for the equivalent of $900 or so in Europe,” Robert Cyran and Dwight Cass report for The Wall Street Journal.
“Perhaps it’s no coincidence that iPhones, perennially sold out at Apple’s Manhattan stores, are in stock in Buffalo. Manhattan is full of tourists armed with strong euros, rubles and Brazilian reais. Few of them visit cities in upstate New York,” Cyran and Cass report.
“This explanation, while speculative, has big implications for Apple and AT&T. Of course, there could be others explanations. Apple, which declined to comment, could be clearing the decks for a new version of the iPhone. Or it could have simply misjudged demand or run into parts shortages. Listen to the Babel of languages in Apple’s New York City stores, though, and it’s easy to imagine the missing phones in suitcases flying overseas,” Cyran and Cass report.
Full article (subscription required) here.
I hope Apple eventually decides that locking them is futile, but I guess so long as they’re getting their cut from the carriers it’s unlikely.
Man, count me in that one. I brought back 15 in my suitcase to a Nordic country. Those puppies sold faster than an unauthorized Paris Hilton porn flick.
3G iPhone in 60 days?
http://www.engadgetmobile.com/2008/04/05/walt-mossberg-promises-3g-iphone-in-60-days/
@Webster’s Idiot Finder
If you are going to use a big, grown up sounding word to slam another poster, then at least try to spell it correctly. Otherwise you risk to look like “an idiot and an a-hole at the same time” yourself. Your best chance of finding an idiot is to look in the mirror.
All the people who think this isn’t a big deal are apparently unaware that Apple sells iPhones at a loss, and they only break even after a couple months of fees from At&T;.
It’s a Big Deal!
@Thomas
Apple does NOT sell the iPhone at a loss. That is a myth put around by those who cannot understand Apple’s business model.
If you consider that the iPod Touch is virtually the same internals minus the phone components and they sell that at a profit, and the cost difference is more than sufficient to cover the additional components needed for a phone.
The other phone manufacturers would say they sell at a loss also, but do not believe that either. It is an accounting trick around how they amortise the capital costs of their R & D for a new product. But it is still a trick at the end of the day to justify higher prices.
Apple makes a profit on every iPhone sold no matter where it is sold or whether it gets an authorised service contract. If it does get an authorised service contract it earns them more money, but they have still made a profit on the base unit.
It is not (only) about commercial smuggling. There is no business or vacation travel from Europe (and elsewhere) to the US where the traveler hasn’t been asked by friends or colleagues to return with an iPhone or two.
Most of these people then use these with their current SIMs and just extend their plan to cover some extra traffic for checking emails or occasional surf sessions.
Least of them would use these phones to activate them with an Apple blessed provider.
As described in the article, avg saving vs. a purchase in Europe is beyond 150$. And times where people pay an extra 50 bucks for unlocking are over. ZiPhone and 2 minutes of time is all you need.
Yes, Steve has a growing problem to solve with the partner carriers, not with those unlocking people. These are the crazy ones, the rebels… they bring Apple further. He loves them!
“Tourists snapping up Apple iPhones” – does that mean the tourists are snappy?
@Steves Job
Are you dumb …
Maybe some one will “spell” the joke out for you.
True, Apple loses some ongoing revenue when this happens. But it’s a good thing in the long run. (1) Apple still makes a profit on the sale, even if the iPhone is not used on the official network. (2) Apple can use these “pre-sold” iPhones in new markets as a negotiating tool to obtain better contract terms with the company wanting to be the exclusive carrier. (3) Apple will eventually be in those markets where these iPhones are being sold “illegally”; there is a good chance those “lost” iPhones will find there way back to a revenue earning contract with the official iPhone carrier.
I don’t see a downside. And, of course this is happening, especially with the dollar being weak.
I’m here in Shanghai, China today. And, I was in the Old Town, where all the tourists go. While buying some pearls, I saw a european tourist, German, pull out an iPhone and demonstrate it to his tour guide. Next thing I know, his Chinese tour guide pulls out his iPhone.
I suppose I shouldn’t have been too surprised. What did surprise me was how well, Google Maps worked. I could triangulate my location pretty well. China Mobile has better cell coverage, even in the rural countryside than AT&T;does in Eastern NC. I seem to always get 5 bars, and Edge coverage.
Speaking of China Mobile, there are stores everywhere, and Nokia has a HUGE presence. I suppose they’re not all smartphones, but Apple has a way to go to get mindshare.
@ Jim-TIV:
From the back of the iPhone box:
Requirements: Minimum two-year wireless service plan with AT&T;required to activate all iPhone features, including iPod features.
Like it or not, the only way to legally activate an iPhone purchased in the U.S. is to sign a contract with AT&T;. If Apple or AT&T;wanted to go after you, they could.
Maybe we could dig a tunnel under the ocean just to make it feel more illegal!
To Thomas:
After nine months of having iPhone on the market, there virtually hundreds of articles everywhere, from day one, about the cost breakdown for the iPhone. It all boiled down to this: it costs Apple around $220 to make the iPhone. They are obviously making very nice profits on every iPhone ever sold. Also obviously, they are making even much more with a signed contract ($8 to $12 per month, plus activation bonus between $50 and $150). I am surprised after this much time, someone can still come here and claim that Apple is losing money on non-activated iPhones!
As for the “requirements” from the back of the box, they are not a legal contract. Nowhere on the box does it say that “…by purchasing the phone, purchaser legally accepts to activate the device with a minimum of two years of service”. The only legal agreement purchaser accepts is once they activate the phone through iTunes. Until that, they have perfectly legally purchased a brick. What they do with it after that (in legal terms) purchase is no different to what happens after purchasing an iPod (or a desk lamp, a dishwasher, or a pair of shoes).
Requirements on the box refer to the functioning phone. In other words, in order for the iPhone to function properly, purchaser is required to activate the two-year plan. If they don’t care to have it function properly, they don’t need to do that. Same as System Requirements on software boxes. You could legally buy any software without even owning a computer. In order for it to function, though, you’ll need a computer that meets the requirements.
To wrap up, nothing illegal here. Apple is profiting on every extra iPhone sold (a sale that would never have occurred, if the iPhone could never be unlocked).
I live in Buffalo and was at the Apple Store here a couple weeks ago when I noticed a Canadian guy buying four iPhones. You can’t tell me he wasn’t going to unlock and resell those things. (not that I have a problem with that or anything!)
@ Predrag:
Requirements on the back of the box are not a legal contract. Point taken. However, the iPhone Software License Agreement is legally binding, and it’s a violation of the iPhone software license agreement to modify the iPhone software (part 2.(c)), which includes the Boot ROM and embedded software (part 1.). Thus, only Apple can legally activate the iPhone software (unless someone figures out how to do it without modifying the software), and a contract with AT&T;is required to activate any iPhone that is purchased in the U.S. Says so on the box.
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You may not like it. You may not care. Apple doesn’t seem to care. I don’t really care either. I only argued because I’ve been sick in bed with nothing better do to. But none of that changes the fact that there is nothing legally questionable about this; it’s illegal.
unlocking is free, most places you can get an unlocked iPhone for a $100 premium, not $900.
Hi everyone. Great site. Hold on.
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