Anonymous Programmers Reveal iPhone Unlocking Software

CNN reports details of a group of anonymous programmers who are planning to sell iPhone unlocking software on the Internet. They demonstrated the software hack for CNN and had a T-Mobile sim card working moments after removing the AT&T sim card. This is bound to stir up a lot of controversy: in the US iPhones are supposed to work only on the AT&T network in the first two years according to their agreement with Apple.

It's not really surprising..

[QMalcolm (1094433)]

..that people are going to use their gadgets in ways other than the ones they're 'supposed' to.

Maybe not surprising, but...

[Moraelin (679338)]

Maybe not surprising, but we'll have to wait and see what kind of effects it has on the iPhone.

Thing is, that kind of agreements aren't just because Apple or AT&T are "evil" and want to tie you to their network. They're a glimpse into how expensive the iPhone really is. That price you see when you buy one is already minus AT&T's subsidies, and I wouldn't be surprised if they're quite hefty.

That's how everyone else negotiates too. Exclusive contract is worth X dollars, for the features and hopefully new killer app, Y dollars, for tying some functionality to their network, Z dollars, and so on. Dunno how it works in the USA, but that's how we end up with 1 Euro phones down here, as long as you're tied to a telco.

Seeing the extent to which the iPhone is locked down, makes me think Apple negotiated some pretty damn hefty subsidies for it. I mean, for example, for any other phone, they don't even bother worrying what you do with it, as long as you have your two year contract with the one who subsidized it. If you have your 2 years T-Mobile contract anyway, and you want to use that phone with Vodaphone too (thus paying two phone bills for it), T-Mobile won't usually give a damn. It's just assumed that most people won't bother. If you wanted a Vodaphone contract, you'd have just gotten one of their phones. If for the iPhone anyone actually gives a damn whether you can use it at all on another network, they probably are paying more than the standard subsidies for it.

Thing is, the iPhone didn't happen before just because it's expensive, not because everyone else is a drooling moron and Apple is t3h genius. Symbian has all the expertise they need with touch screens even before they starting having anything to do with phones, for example. My old Psion 5 has touch-screen. Everyone just bet that there's not much of a market for a phone that costs as much as a laptop. Apple apparently bet that there's one if they get half the price subsidized by AT&T.

So it might get interesting. If Apple can't deliver the lockdown they promised for the extra money, AT&T would have to be dumb to keep paying for it. And that's at the very least.

Would the iPhone still be as attractive as a $1000 toy (a number pulled out of the arse, for example sake) if it were unlocked and usable on any network? Sure, for some nerds it would still be a cool toy, but more people -- or they significant other, if they have one -- would start wondering if they _really_ need one.

It might get interesting.

Please don't get me wrong. I'm not advocating curtailing consumer rights to save the iPhone. Just saying what I see at work there. (And I could be wrong too.)

Re:

[WhatAmIDoingHere (742870)]

"Thing is, that kind of agreements aren't just because Apple or AT&T are "evil" and want to tie you to their network. They're a glimpse into how expensive the iPhone really is. That price you see when you buy one is already minus AT&T's subsidies, and I wouldn't be surprised if they're quite hefty."

The funny thing about your post is that you're simply incorrect. The parts for the iPhone are about $250. Gluing them together doesn't cost another $250.

"Seeing the extent to which the iPhone is locke

Re:Maybe not surprising, but...

[LarsG (31008)]

They're a glimpse into how expensive the iPhone really is.

Are you a key employee at Apple and know how much they cost to build? Because the rest of us out here have to depend on tearing the phone apart and pricing the components - which at current best guess is at something like $250-$300. Except for the display, the components are pretty much standard off the shelf type stuff which is easy to price. So fess up, are the estimates on the display price way way low?

Thing is, the iPhone didn't happen before just because it's expensive

The iPhone happened because someone at Apple (Jobs, perhaps?) saw a market opportunity in the fact that most cell phones have a sucky UI. What makes the iPhone is a nifty multi-touch display and a lot of software development.

Traditional phone makers like Nokia don't have the same kind of incentive to sink a lot of cost in 'reinventing the UI'. Their current models are selling quite well, so why spend a lot of money on something that might or might not work. Not to mention legacy concerns - S60 has a thriving 3rd party software market, radical changes in the UI cause compatibility problems. Which is why you often see these huge jumps not from established players but from companies seeking entry to the market.

Apple's Margins

[LKM (227954)]

Traditionally, Apple's margins have always been around 25%-35%. I'd be extremely surprised if the iPhone was different in any way; and so far, teardowns (which tend to underestimate prices somewhat) seem to suggest the iPhone's margin is business as usual for Apple.

Heh

[Moraelin (679338)]

To quote Scot Adams' My New Favourite Response [typepad.com] to people answering to their own mis-understandings of what he wrote, "I agree with your analysis of your hallucination."

I never said that the cost of manufacturing dictates the market price. It does however, yes, dictate whether you stay in that game or not. "Would it still sell for $1000?" is actually a damn valid question. It's the "can we stay in that game?" question, in fact.

Apple's model is based on getting a hefty part of the price subsidized by AT&T. Without it, would they still be in the game of selling iPhones? The others faced the exact same question, and that's why they didn't make an iPhone before. That's what I'm saying there.

So if you got tripped that badly by "Would it still sell for $1000?", then maybe it's you who needs to re-read those econ 101 notes. Because while you've proven that you can repeat the trivia, I see no sign of actual understanding there. _That_ question is exactly what determines whether you're in that game or not. If you don't understand that, the rest is just mechanically spewing trivia, and not much of a sign of economic wisdom.

Re:

[Spokehedz (599285)]

The 8GB iPhone costs 220 to make. [reghardware.co.uk] This is a gross estimate, but it was the second result in Google and I can't be arsed to look any further. It's a good baseline, if anything.

So each phone is $600. Toss in 'activation' which is usually somewhere around $35, insurance which is about $5 each month, and then the plan itself which will run you $100 a month recurring for the next 24 months...

600 + 35 + (5 * 24) + (100 * 24) = $3155

lets assume that you don't use up all your minutes, you don't send thousands of te

Hunh?

[celtic_hackr (579828)]

That estimate only covers the cost of parts!

Not to be too cynical, but seeing as /. has all these folks who claim to be
uber geeks and hax0rs, I shouldn't have to state that they must have spent a
fortune on programming for this product. EVEN if they used only ultra cheap
programmers from you-know-where-places, it would still have taken many many
thousands of hours to write, and assuming it was put together in China, and shipped
to the US, a cost of $220 is about as realistic as the $1000 arse value.
No, I suspect, a more realistic cost to be in the neighborhood of $500 to produce.

My reasoning is based on:
1) having worked for years in the assembly of everything from EKGs to IBM Mainframes to 747 flight simulators
(not your video programs, but full scale mock ups of the cockpit), so I have firsthand knowledge of what
it takes to assemble electronic devices,
2) Having worked for years in the shipping business, I know what it costs to ship products from China in 40'
containers over the ocean,
3) the amount of advertising that was done,
4) the cost of software development (my current line of work),
5) cost of prototyping, packaging, product manuals, etc.

Re:

[hhw (683423)]

Just because it only costs $250-$300 to manufacture doesn't mean that's all the phone costs. There are a multitude of other costs involved here, including research & development, warranty/maintenance, support, distribution, sales, marketing, yada yada yada. Find some accurate estimates on what the total real cost for final delivery is to the end user, and that it's substantially less than $500 and you might have a point.

Re:

[Moraelin (679338)]

Well, it's sorta a question of estimated market share, the way I see it. Someone probably figured it out like this:

- we'd sell X1 thousand units at price Y1, unlocked and for everyone

- we'd sell X2 thousand units at the much lower price Y2, even if it's tied to AT&T

Obviously they thought that X2 > X1.

Whether that's right or wrong, smart or dumb, I couldn't tell. But basically, yes, Apple obviously thought that that's a smart move. Feel free to agree or disagree with them, though.

Re:

[SpectreBlofeld (886224)]

I work for Verizon Wireless.

Verizon was approached by Apple and offered the iPhone before AT&T.

One of the reasons (among many) VZW turned it down was because one of Apple's terms was that the iPhone not be subsidized in any way.

So GP is correct.

Apple has a history of this - not letting retailers discount their products, I mean.

We call this 'price fixing,' and until recently, it was illegal.

Re:

[Ecks (52930)]

What Apple is doing is not price fixing. It's price setting. Price fixing when when two or more suppliers of a commodity agree to the price at which they offer the commodity. Usually the purpose of price fixing is to offer that commodity at a higher price than would occur in a free market. Apple is only one company and it's arguable that the iPhone is not a commodity. Apple can set whatever price they feel the market will bear. If customers don't like the price, they won't buy the phones.

Carping about App

Probably not subsidized

[LKM (227954)]

A lot of news outlets have reported that the iPhone's price is not subsidized, among them reputable sources like ars technica. [arstechnica.com]

But I guess your own question applies to you, too. Where's the evidence that it is subsidized?

Third party

[edittard (805475)]

in the US iPhones are supposed to work only on the AT&T network in the first two years according to their agreement with Apple.

That agreement can't be binding on a third party. Apple can say "hey, we tried." Whether AT&T think they tried hard enough is a different matter - and if they don't, well, it'll be lawyers at 100 paces.

Re:

[N-icMa (1149777)]

I have no idea how people bought these phones, but if Apple required you to sign a form promising not to use anything but AT&T for six months, then you wouldn't really be able to claim independence from the lock-in agreement.

Atleast

[pakar (813627)]

... here in sweden we are allowed to do whatever we want with hardware that we buy.....

Re:Atleast

[tsa (15680)]

Yes, but we live in Europe, the Continent of the Free...

What's this free of which you speak?

[Futurepower(R) (558542)]

"Yes, but we live in Europe, the Continent of the Free"

Free? What? Do you mean you don't have to pay taxes to kill people in places you can't find on a map?

Re:What's this free of which you speak?

[SpaghettiPattern (609814)]

Yes, but we live in Europe, the Continent of the Free

Do you mean you don't have to pay taxes to kill people in places you can't find on a map?

Don't want to brag and boast, but here in Europe we tend to know about geography. I.e. that California isn't the capital of Milwaukie.

So, we pay taxes to kill people in places we actually can find on a map.

Besides, thanks to the new phenomenon called "Internet" we also have a tool called Google maps.

Re:Atleast

[xigxag (167441)]

I've got nothing against Europe, but it's pretty lame if you think you're proving something by trotting out the same jingoistic slogans used by Uncle Sam. Europe's freer than the US in some respects, but not as free in others. There's no nation in the world that's totally free, and likely never will be, since "freedom" and "government" are a contradiction in terms.

On the other hand, if you were just referring to the freedom to buy an unlocked handset, well, um, never mind then. :)

Re:Atleast

[noidentity (188756)]

I live in America, the Continent of the Apathetic, but eh whatever.

Re:

[Bert64 (520050)]

Well fireworks are legal to set off in your backyard, they're small bombs...
If the bomb is big enough to damage someone else's property then they might arrest you for criminal damage, but if it just explodes in your back yard and makes a crater in your lawn noone will care.

Re:

[budgenator (254554)]

The point he was making is that we live in a global economy and just because the US has a certain set of Laws and legal rulings doesn't mean Sweden has the same; there may even be conflicts in laws where it's illegal to do something and in another country it's illegal not to do it. AT&T helped to make this bright shiney Apple [wikipedia.org] and rolled it out into the party knowing that everybody would want it, they shouldn't get upset because everybody wants it.

When I went to college marketing invovled things like res

I wonder

[digitalchinky (650880)]

I wonder if they will work their website much like the 3rd party unlock stuff for Sony Ericsson. I can't imagine they would sell the entire program, more likely it'll be missing some key components so that users are forced to pay a fee to complete the unlock process (by logging in to their server)

locks make no sense

[_Shorty-dammit (555739)]

Locks make no sense, at least not for consumers/customers. I can see how it could work to their benefit, but I don't give a rat's ass about them. If I wanted one, why would I want to be locked in to one specific service provider? My cellular provider up here in BC, Canada, which is Telus, puts stupid locks in their phones, too. I can't upload my own ring tones or anything like that, and I'm instead forced to pay them outrageous fees to download ringtones from them. Only because they've locked the phone to perform only the functions they want it to. No reason I shouldn't be able to upload my own ringtones if I want to, since the phones have that capability from the factory. It's only after Telus blocks those features that they are no longer available to use. Ridiculous. All things like this, DRM, etc, are doing nothing but giving me bad opinions of the companies that use such tactics.

Re:

[mwvdlee (775178)]

Locks are typically there to make the phones (hardware) cheaper for the consumer. In that sense I do understand why they exist; otherwise consumers would have to pay the actual price of the hardware (which is a lot more than most people would be willing to pay). In the case of the iPhone however, I understand people are paying full price even though they get locked into a 2 year contract.

Re:locks make no sense

[digitalchinky (650880)]

I don't know that you really understand the corporate mindset behind locking down of phones. It's not about making the hardware cheaper, on a world scale it's already about as cheap as it's going to get - America is part of a small and unique set of countries in which the phone companies have given people the ability to get a desirable object 'right now', often with no up front payment - it feels like it's free. The contract already makes the phone company more money than what they paid for the handset, plus enough to keep their systems running, along with a little extra to bolster the profit margins.

They've found ways to make even more money on top of this by tweaking firmware to force customers to pay extra for things they could have already done for free. This is a cash cow, nothing less. People want the phone as soon as they feel the urge to have it, the market built itself around this desire. It's not wrong, I don't even think that it's bad. After all, even in America people can still buy a phone outright. They have a choice.

Re:

[Bert64 (520050)]

The locks don't make the phone cheaper, they effectively extend you a line of credit (like a loan) for the phone that you pay off over the term of your contract...
The provider locks are there to try and prevent you using the phone with a competing service, although it seems rather pointless to do this.
Application locks on the other hand, just suck... The operator intentionally crippling the features of a phone (and often not telling you in advance) is a terrible thing to do.

If you were to buy a cheap phone

Re:locks make no sense

[smilindog2000 (907665)]

Worse than the cell-vendor locks are the application locks on the iPhone. Most of us are unwilling to buy a $600 phone and then hack it, potentially rendering it unusable. The application space for the iPhone are huge, yet we can't do dick. We could port Skype/OpenWengo/Gizo, gaim, and provide a shell. Can you believe there are zero native games on the iPhone? My wife uses an iPhone, but until I can legally program the damned thing, I'm not getting one.

Re:locks make no sense

[Xyde (415798)]

http://iphone.fiveforty.net/wiki/index.php/GUI_App lications [fiveforty.net]

There are currently 32 native iPhone apps on that page including 8 games, an AIM client, 2 IRC clients (not including BitchX), a fully functional VT100 terminal, RSS, eBook readers and much more with the development constantly growing. These are all open source and written in UIKit/Cocoa, with other apps happening that aren't listed there.

Just because the application development isn't officially Apple sanctioned doesn't mean it isn't happening.

Re:

[UnanimousCoward (9841)]

Well, you just reaffirmed El Jobso's strategy: He ain't selling to you, he's selling to your wife.

My wife uses an iPhone, but until I can legally program the damned thing, I'm not getting one.

Telcos subsidise the phones locked to them

[Colin Smith (2679)]

Locks make no sense, at least not for consumers/customers. I can see how it could work to their benefit

The reason locking came about is that telcos were subsidising phones. That $30 locked phone you've got? Cost $45 and would retail for $90. They make their money back over the years on call charges.

I have no idea if the iPhone is subsidised.

 

Re:

[dwater (72834)]

> I have no idea if the iPhone is subsidised.

An AT&T memo said not, but I don't believe it.

Not bounding

[wannasleep (668379)]

When you purchase an iPhone you are not signing anything (other than a credit card slip). Hence, you have not entered in a contract with AT&T, so whatever AT&T spokesperson says, it is not tenable. Furthermore, unlocking one's phone is not illegal in the US.

Re:

[aerthling (796790)]

Please excuse my bumbling ignorance, but wouldn't breaking a contract fall under civil law?

They are just unlocking a phone people!

[Frogbert (589961)]

I can't believe unlocking an iPhone causes such a stir. GSM phones are unlocked every day through mysterious hacks and the iPhone is no different. What is the big deal?

Re:They are just unlocking a phone people!

[Opportunist (166417)]

The big deal is that there are two companies that agreed to a mutually beneficial deal, ripping off their customer, and someone dared to muscle in and offer the customer what he wants.

In other words, the DMCA must come to the rescue.

Re:

[dwater (72834)]

"flamebait"???

come on moderators. what are you thinking? the poster is absolutely correct...his spin is somewhat negative, but that's not 'flamebait'.

Re:They are just unlocking a phone people!

[squiggleslash (241428)]

Now hold on there. I don't believe either Apple or AT&T have (really) made any threats over this. The latter was claimed to have made a threat by one unlocking group that has yet to demonstrate a working product and isn't even located within the US, but it's notable that both the group that's the subject of this article, and the kid who used a hardware hack a week or so ago and thus gets credit for being "first" have not reported any threats of legal action. Given the sheer improbability of this (evil mobile operators would more likely sue real phone unlockers) and given the lack of compelling evidence a lawsuit even exists, most people believe that the "lawsuit" is fictional, made up to drum up publicity.

AT&T, so far, seems content to let Apple handle the issue (which is all they can do, because AT&T doesn't have a legal leg to stand on, not having any relationship to people who have yet to activate an iPhone, and not owning any of the IP associated with the iPhone), and Apple seems content, thus far, to either ignore the issue or use technical measures. Apple's room for legal maneuvering is open to question too, given the US Copyright Office has already given a public, explicit, exemption from the DMCA for phone unlocking.

God!! The Terrorists are going to kill us all...!!

[Anonymous Coward]

These people should be neutralised immediately! No stone should be left unturned. Pull all the troops back from Afghanistan if we have to. Order another 500 Predators! Close down all interstate traffic!

Won't someone think of the children? How can you sit quietly at home while this sort of vile attack on our American values is going on? I would happily help the Government slaughter half the population if that had the smallest chance of stopping this madness.....

AT&T has no real claims

[ReallyEvilCanine (991886)]

AT&T has no claim against Apple since they delivered the phone locked to the AT&T network, as promised.

Any DMCA claim is going to be tough in light of the following:

From the Federal Register:

The Register has concluded that the software locks are access controls that adversely affect the ability of consumers to make noninfringing use of the software on their cellular phones. Moreover, a review of the four factors enumerated in 1201(a)(1)(C)(i)-(iv) supports the conclusion that an exemption is warranted.

-- Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 [copyright.gov]

And from the US Copyright Office itself:

There is no evidence in the record of this rulemaking that demonstrates or even suggests that obtaining access to the mobile firmware in a mobile handset that is owned by a consumer is an infringing act. Similarly, there has been no argument or suggestion that a consumer desiring to switch a lawfully purchased mobile handset from one network carrier to another is engaging in copyright infringement or in activity that in any way implicates copyright infringement or the interests of the copyright owner. [pg. 50]

...

the Register recommends that the following class of works be subject to exemption: Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network. [pg. 53]

-- Recommendation of the Register of Copyrights [copyright.gov]

The only claim they might be able to make is one against those selling the information which will, inside a few days, get out and be posted everywhere so that anyone can do it.

This is actually good for Apple

[Skapare (16644)]

This is actually good for Apple because more people will buy an iPhone now that they know they will be able to use a less evil carrier.

Run that buy me again?

[delire (809063)]

First you buy the iPhone and then you pay more to unlock it? Is that how much 'freedom' costs?

Next thing we know Apple will buy-out the company and start selling unlocked iPhones at a premium..

At the risk of sounding trollish, the pro-consumer OpenMoko [openmoko.org] looks very appealing in light of Apple's good-looking but artificially tied-down device.

Great, but aren't they missing something?

[AccUser (191555)]

I might be wrong, but wasn't the exclusive contract between Apple and AT&T put in place to ensure that AT&T would develop the network infrastructure and services to support the features of the iPhone? Sure, basic call functionality and SMS is available with all operators, but what about the other features, such as the visual voicemail?

I am personally looking forward to getting my grubbies on an iPhone once they land in the UK, and would be happy to be able to make a choice of operator/contract.

Big question is how much will they charge?

[orlinius (181137)]

Having in mind what the demand curve for a software-based unlocking solution for the iPhone is, especially in Europe, these guys can easily charge more than 100 USD for the hack... at least until somebody else puts a competitive hack on the market.

Will it be fully functional?

[NoPantsJim (1149003)]

I haven't heard anything about the functionality of these unlocked phones. Are all of the features of the AT&T data plans functional with a different carrier or is it additionally locked down in some way? Also, what happens when Apple pushes out an update that disables this hack. If the developers can't come up with a new hack in time, what happens to all the people who paid for the original hack that no longer works?

iPhone in Europe

[tsa (15680)]

I am very curious what Apple will do with the iPhone in Europe. I think pulling off the ridiculous AT&T-only lock-in prank is impossible here. Yes, we have locks on phones here too, but in principle you can buy any phone you like without a SIM-lock and use it with any provider. You only get a locked phone if you get it together with a contract, which is reasonable because the provider then wants you to stay with them. Exclusive use of particular phones with particular providers is unheard of here. And am I correct in thinking that locking a phone is illegal in Germany?

Re:

[IndieKid (1061106)]

I know in the UK that it has been fairly common practice to lock down phones. Until recently, all subsidised phones on an Orange contract were locked to Orange (they might still be for all I know, I've never been on Orange).

As far as I know, Vodafone has never locked it's phones to only allow Vodafone SIMs (I've regularly used other network's SIMs in my Vodafone phone), but they do tend to put custom Vodafone firmware on the devices which can cause a loss in functionality if you put another SIM (say from

Anonymous sellers?

[xxxJonBoyxxx (565205)]

...group of anonymous programmers who are planning to sell iPhone unlocking software on the Internet.

"Anonymous" sellers? How does that work - cash payments left under a bench somewhere?

Re:

[eiapoce (1049910)]

If the US government had any balls, the hackers wouldn't have to be doing this.

I'd fix it for you:
If the US government backed consumers instead of industry, the hackers wouldn't have to be doing this.

Enrico