Apple Computer and AT&T Tie Down I-Phone Buyers; Hackers Undo Problem; Apple Sends "Updates" to Wreck the Untied Phones

Surprising number of iPhones unlocked

Apple says nearly one in six have been tampered with to run on unauthorized wireless networks. From Bloomberg News October 24, 2007

Apple Inc. said Tuesday that almost one 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.

Chief Operating Officer Timothy Cook said 250,000 of the nearly 1.4 million iPhones sold might have been bought by users with the intention of unlocking them to work on a network other than AT&T's.

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.

"I did not think it was that much," said Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis, describing the 250,000 figure as "huge."

Some people have been buying 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.

To quash unauthorized use, Apple released an iPhone software update last month that rendered some unlocked devices inoperable -- an approach that users described as turning the gadget into a "brick." Hacker groups have since developed software that bypasses Apple's update and allows bricked phones to work again, according to appleinsider.com.

Apple said Monday it sold 1.12 million phones in the three months ended Sept. 29.