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Friday, July 20, 2007

Unlocked iPhones: What is Apple’s Secret Weapon?


It's probably a matter of time before we see a true unlocked iPhone on the market. Hackers are working day and night to achieve this goal, and chances are they will succeed on a short or mid term period. DVD Jon has already been able to bypass the iTunes activation process and these hackers were able to unlock the iPhone and make it functional with any AT&T SIM card, freeing you and the iPhone from the two year contract.

But a successful attempt to completely unlock the iPhone from AT&T network could seriously hurt the relationship between AT&T and Apple. The very tight agreement signed by the two giants is based on the fact that customers must sign a two year contract with AT&T. If unlocking the iPhone becomes something easily done, AT&T and Apple executives will certainly not stay put, cross their arms and do nothing about it.

The iPhone lock is so important to AT&T and Apple's relationship, that they must already have a B-plan in place to avoid losing the 2 year contract for too many new iPhone customers. And I don't believe that they just crossed their fingers and said that "It won't happen".

But what can be the back-up plan? What could be the secret weapon that Apple and AT&T have in their back pocket to stop the hackers? Here's a possible scenario:

A great aspect of the iPhone user experience is the ability to activate the iPhone from the comfort of your home using only iTunes. But the back-up plan could simply be to drop that and go back to standard store contract signing and phone activation. This way, they would secure the contract and avoid the iPhone being used on Sprint or T-mobile. Yes, the iPhone will still be unlockable, but at least, Apple and AT&T won't lose any money because of this. At least on the short term period.

We can argue that the unlocked phone market is a marginal industry and that even if the iPhone is finally unlocked, this hack would not be used by the regular guy on the street. But this might be different with the iPhone - mainly for two reasons. First of all, people want an iPhone badly and they're ready to do anything to reduce the operation costs. Secondly, and this is even more important, AT&T's five year iPhone exclusivity, will push people to hack the phone in order to use it on T-Mobile or Sprint. Sure, by using the iPhone on another network they will lose features like Visual Voice mail, but that won't be a show stopper for many people.

A positive note for Apple, an easily unlockable iPhone will boost the iPhone sales even more. But AT&T would certainly not let Apple get away so easily with this one…

What do you think about this? Do you agree? Do you think Apple will just let that happen because it will remain a marginal market?

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