Apple starts disabling hacked iPhones

After the release of the iPhone, there was some consternation over the non-release of the iPhone outside the United States; it was speculated that hacked copies of the iPhone would be available outside the United States and that this was a natural occurrence. Apple would not be able to do anything about this. Well, looks like the design of Apple's engineers had actually planned for this. So, the latest firmware update to the iPhone has actually disabled the iPhone, apparently permanently for those people who have hacked iPhones. But is this the last statement on this matter ?

The iPhone 1.1.1 update, released Thursday, breaks phones that have been hacked so that they work with providers other than AT&T Inc., the only U.S. provider Apple has allowed to carry its mobile phones. Apple has said that it would fight any attempts to unlock the iPhone. Earlier this week the company released a warning that unlocked iPhones "will likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed."
The new software is Apple's biggest iPhone update to date, and it fixes a number of security flaws in the mobile phone's browser, mail client and Bluetooth networking server. The majority of the flaws do not appear to be critical, but the update fixes a larger number of bugs than the first iPhone update, released July 31.
Mobile phone users typically cannot update their own software, but Apple introduced this capability in the iPhone, which uses the update mechanism in the phone's iTunes music player. iTunes checks for these updates once per week, so it may take up to seven days for all iPhone users to see these updates. Apple advises users to install the update immediately.

Now, while this patch fixes bugs in the iPhone and should be installed by users, it is unlikely that the hacker community will accept this matter as a fait accompli. It's a gauntlet that Apple has thrown to the hacker community, and with the hacks spawning a new business, there is a major commercial angle to it. Thus, it is likely that hackers will now start to put their creative thoughts on how to defeat this latest attempt by Apple.

iPhone in Europe

After much hand-wringing and puzzlement over the US only release of the iPhone, Apple is slowly releasing the iPhone in European markets, although, not as attractive to users as it was for the US market. The plan is to release in the UK sometime in October 2007, and then go onto Germany on November 9, 2007. Although one can expects some amount of anticipation, there will not be the same buzz about the release as there was in the US market near its release. Many reasons for this lack of a buzz:
1. The industry to release a patched version of the iPhone that is not carrier restricted is in full swing, so a number of users would already have the iPhone in use with European networks.
2. Europe is far ahead of the US in terms of speed of telecom networks, with 3G being common, and the iPhone currently only supports EDGE which is a lot slower. For people already using 3G or planning to buy a phone to use 3G and get the high speed, the iPhone is a non-starter unless it gets a 3G version
3. Pricing is a major issue. The phone in the US sells for $399, and will sell for a converted value of around $540 in Europe which is a significant premium. Not sure how many people will buy the device at these prices.
4. Apple in the US has gone with a 2-year contract with AT&T for the service plan, but a long service plan is not par for the course in European countries. For customers used to paying on a regular basis and not getting locked into a contract, especially when the contract does not lead to a cheaper device, the iPhone will not seem so attractive.
will all these factors, one will just have to wait and see whether the buzz factor of the iPhone as a must have device is enough to overcome all these.

Apple reduces price of iPhone by $200

This was not something that anybody would have expected. There was the usual sense of expectation regarding what would be new products introduced by Apple, but nobody would have expected the price of the iPhone to drop by a third, to $399. This is good for the people who were thinking of buying the iPhone but the price of $599 was too expensive for them, or maybe they just did not want to spend so much on the iPhone.
It sure looks like Apple felt that the sales figures for the iPhone were not meeting the desired levels, and the cost is a significant factor, and hence the reduction in the price. This price will make the iPhone more attractive for the holiday season and should spur sales. However, there is a very vocal group of uses who feel extremely dissatisfied with this decision, and it is quite expected. After all, to buy a new gadget is good, and then to find out after you buy it that the price has dropped by $200 would make you look like somewhat of a fool. The users were fairly vocal on the Apple website, and the company decided to give all of them $100 as compensation.

Apple on Thursday offered a $100 store credit and an apology to early adopters of its iPhone mobile handset after they reacted angrily to a large price cut within 10 weeks of its launch. The move, designed to boost sales during the holiday season in the US, was an unusual one for the company. It commands premium prices for its products and tends to add features to them to justify maintaining existing prices.
IPhone owners, some of whom queued for days to buy the handset before it went on sale on June 29, had by Thursday besieged Apple with complaints that they had been taken advantage of and overcharged. Apple’s price cut had also disappointed the market. The company’s shares fell 5 per cent on Wednesday on concerns about the effect on profitability and the decision to cut the price so soon. Apple shares closed a further 1.3 per cent lower on Thursday at $135.01.

This may actually be the first time that Apple has to had face the backlash of customers in such a way, and would not have been pleasant for them. However, it must have been necessary for Apple to make such a move in order to avoid getting a bad backlash from customers; at the same time, given the need to increase sales, the price cut would have been necessary.

AT & T provides new service to give parents control

Nowadays a lot of parents feel that they have lost control on the internet and phone habits of their children, and feel distressed about this. However, it is difficult to act as a policeman at all points of time, so, to leverage on this demand, AT & T has come out with a new service that provides some sort of control facilities on the use of the wireless phone.
So AT & T's new Smart Limits for Wireless is a service that enables parents to set usage limits on the talk time, text messaging, instant messaging and downloading, and also setup filters for mobile web sites. The service provides for parents to control the total bill on their children's plans.

The new service, which is part of AT&T's Smart Limits program across multiple technologies, helps parents protect children from inappropriate calls, texts and Internet content by allowing them to block numbers they deem inappropriate and filter access to content on their child's phone.
The service also lets parents establish a maximum dollar amount that can be spent on download purchases such as ringtones and games, and control the time of day and days of the week that the phone can be used.
When a child nears the established usage limit for any wireless capability, he or she will receive a warning notice; once the limit is reached, the service will be restricted.

The service costs $ 4.99 per month, and given the number of parents worried about their kid misuse of the service, and also to protect them from harm, AT & T would expect this service to be a hit. However, this is not something that a lot of kids would appreciate, given the controls on overall text messaging and call when the total amount nears due.
The service also allows parents to go online and modify the limits that they have set up at any point of time. Of course, given that most parents are behind their kids in terms of technological understanding, it remains to be seen as to how many of them are able to figure out how to use this service effectively.

iPhones sales top that of Smartphones

The iPhone is not a Smartphone as per many analysts, but industry specialists, grabbing at sales data proclaimed that when compared to other Smartphones, the iPhone was the market leader; and in the general handset category, it sold approx 1.8% of all handsets sold. These were based on figures from July, although I would doubt whether the first few months of sales should be an indicator for future trend. After all, the iPhone was one of the most publicized devices, with a halo like aura around it, and proclaimed as the new revolutionary device. It would not be surprising that so many people wanted to be the among the ones to carry the device as it would seem like a major new gadget, a cool thing.
The sales figure from iSuppli for iPhone sales till now have been used to project for sales figures for the next few years:

Apple's iPhone was the top-selling smartphone in July, research firm iSuppli reported Tuesday. On the basis of sales figures so far, iSupply predicted that 2007 iPhone sales would reach 4.5 million, would triple in 2008, and would hit 30 million in 2011. "This is a remarkable accomplishment for Apple," iSuppli said in a statement. It's "likely," the firm said, that iPhone sales so far represent the strongest start for a handset in history.
Greg Sheppard, chief development officer for iSuppli and the author of the study, said that there "was a lot of pent-up demand" for the phone. "The follow-up months will be the real proof of the pudding," he said in a telephone interview. Still, he said, it is a data point that iPhone "popped out ahead" of BlackBerrys, Palms, and other leaders in the smart phone category.
Steve Jobs' latest device tends to be seen as straddling two market segments -- smartphones, which allow users to install applications, and feature phones, which allow users to play multimedia. The iPhone matched sales of the leading feature phone, the LG Chocolate, Sheppard said, noting that some people probably wouldn't put the iPhone directly in competition with smartphones. "But," he said, "if you really look at it, it's a smartphone."

The advantage of the iPhone is that it is seen as having multiple advantages, being a very must-have gadget kind of appeal, being a iPod in terms of playing audio and video, and also having the features of a smartphone. This is a great combination and if Apple can maintain that, it will continue to surge ahead in market share.

Nokia trying to get into mobile services

It appears that Nokia does not learn easily. Long ago, in the year 2000, when it tried to launch mobile services that included downloading of song snippets as ringtones, operators were not very happy since that would have eaten into a revenue source that they were eying themselves. It seems like Nokia would like to try this approach again. After all, being just a handset provider may not be enough in these times of touch competition from other handset providers, and a seemingly easy pot of gold sitting there waiting for them to just grab it. And why would they not think such a thing, with operators failing to get a strategy that would help them grab users for high-data plans; and Nokia having an incredible number of music enabled phones in the market today, and in the hands of users.

On Aug. 29, at a London press conference in a converted fish market alongside the Thames, Nokia's chief executive Olli-Pekka Kallasvuo unveiled plans to launch a slew of services for mobile users—initially in Europe and Asia, and perhaps later in the U.S. Called Ovi (Finnish for "door") the gateway to music, photos, maps, and other content will be available starting later this year.
This time around, mobile operators may be willing to join in. The scheme includes an online music store rivaling Apple's iTunes, aimed primarily, but not exclusively, at the 200 million music-capable Nokia mobile phones already on the market. It also features an interactive multiplayer game service accessible to the 40 million Nokia Nseries phones now in use. And early next year, Nokia will add a service that lets consumers swap personal photos, videos, and audio.

The plan is ambitious, but it has several pitfalls. For example, operators are not likely to be very happy because they see service revenue as something that belongs to them, and not to a lowly hardware maker. In addition, this is a very fickle market and Nokia needs to let this particular section be very creative if it wants to attract users, and one is not sure about whether Nokia is capable of that.

Unlocking the iPhone

Ever since the iPhone was released, there has been a quest among the hacking community to break open the restrictions placed on the iPhone. There would be 3 primary reasons for the hacking effort:
- It's a new device, hence the need for a large section of the hacking community to try and break it; after all, it's a device out there with a major reputation to be made for the first person who successfully is able to demonstrate a break
- The iPhone is locked to the AT & T telecom service for 5 years, and hence there is an effort to break it such that the phone can work with other services inside the US
- There is currently no announced service for the iPhone outside the US, and with a number of people having seen and heard news for months about this great new device, there is a strong factor in trying to get the device to work outside the US.
There have been some news in the past, but no confirmed hack for the iPhone that will break the AT & T activation need. It is of course only a matter of time, and there seem to be some credible news about these breaks:

The iPhone unlocking game heated up considerable over the weekend with no less than three people/groups claiming to have unlocked the coveted Apple device. The first and most impressive iPhone unlock comes from a New Jersey teenager and involves soldering, but most definitely works. Shortly after that came word from Engadget that the somewhat questionable outfit iPhone Sim Free had succeeded with a software only SIM unlock (Engadget claims to have an iPhone that was successfully unlocked).
What about the iPhone Sim Free hack? Engadget is pretty adamant that it works, the iPhone Sim Free folks unlocked one of their iPhones, which led Engadget to throw some bold tags around this statement: “Again: we can confirm with 100% certainty that iPhoneSIMfree.com’s software solution completely SIM unlocks the iPhone, is restore-resistant, and should make the iPhone fully functional for users outside of the US.”

Once such a news is confirmed, and hacking of the iPhone becomes easy, it is very likely that there will be a small industry that will grow around the concept of easy hacking of an iPhone so that it can be used outside the country.

Research unveils a paper battery

Think about your current battery, big, bulky, hard, and full of chemicals. Somehow, it seems battery research does not move much, otherwise why would you need to have a mobile phone whose smallness is limited by the size of the battery. Cars running on fuel cells have similar large batteries, and even electric cars can only store batteries that will allow 50-60 miles of travel without re-charging. But as we develop newer devices, the demand on batteries to be more capable and to do more is going to grow. So, in a sign that research in this area is alive and kicking, here is a new paper based battery that still has some time to get into production:

Researchers at the Rensselaer Polytechnic Institute in New York have come up with a working prototype of a battery made out of cellulose, a coating of lithium and carbon tubes the size of a virus: a sheet of black paper that stores an electrical charge. While it works on the same principle as any battery for sale in a corner store, the paper battery from Rensselaer is much different than a typical AA. For starters, it can be as large as a newspaper page, or cut to the size of a postage stamp. It can be inserted under human skin, and be powered in part by body fluids.
Dr. Linhardt says the device works, but cost will be the biggest barrier – which is why use in the extreme cold of outer space by customers with budgets running into the billions is the most promising takeoff point for the technology. “If you need something to work in outer space, money is no object,” he said. The paper battery also holds promise in medicine, where it could be implanted under a patient's skin and used to power medical devices such as pacemakers. And it can use electrolytes in bodily fluids such as sweat or blood to draw power. In a paper published yesterday, the Rensselaer team details its efforts, including the use of urine to power a test version in the lab.

As always, the development of such technologies take time, and go through several stages of on / off development, with many such technologies getting actually dumped because of infeasibility, but as long as research remains alive, and the demand for such battery solutions remains high, things will continue to improve.

Hacking the iPhone and ease of hacking the Mac

For a long time, Apple and Mac users have disdained the PC and Windows as very bad in security, and instead tom-tommed the relative lower number of hacks on the Mac. Microsoft has always been on the defensive in terms of security, and the large number of cracks and holes available on the OS and apps have always led them to be worried. There have been people who have been saying that Mac has not shown so many cracks just because it has a 5% market share, and people have not found it worth their while to try and break through the Mac OS security:

Though there has yet to be any documented criminal hijacking of the iPhone outside of a lab, Miller says his research shows the relative ease of hacking smart phones, as well as Macs in general. He spoke with Forbes.com about the iPhone's vulnerabilities, Apple's short-lived patch and the company's undeserved reputation for building secure computers.
There are two issues with the iPhone. First, the specific weakness that we found in its Web browser. But there's a more fundamental problem. The iPhone runs everything as "root." In other words, there are no privileges for different users. They should have built layers of security. Instead, if you can find a single crack, any user has the entire phone at their disposal. Last week they basically patched a hole in the wall. But inside, it's still pudding.
Bad guys aren't yet targeting Macs because they want to maximize their time. That means writing viruses that target 95% of computers rather than 5%. Apple currently has around 3.5% of the market, but its market share is growing by around 35% a year. As Mac's numbers creep up to 30% or 40%, cyber-criminals will start asking whether it's better to spend two weeks writing a bug for Windows or just a couple days to write one for Macs.

Almost nothing in this interview is complementary to Mac, but one tends to agree with what he says. Windows is the dominant OS, and most hackers are anyhow biased against Microsoft, in addition people are ready to believe that Windows is inherently insecure, and hence most hackers target Microsoft. Now that the iPhone is a well advertised target, one can expect many more Black Hat hackers to target the iPhone for benefit, and for Apple to be on the backfoot.

Gphone: Google Phone ?

There have been rumours of a Google phone (short form 'Gphone') for some time now. Now Google is a search company, or rather it is a company that is trying to do a lot of things, but which makes most of its money from search. It has tried to enter the mobile world through a tie-up with carriers about placing Google search in the mobile space. Now carriers are typically very hard creatures to work with; they don't allow much freedom.
And there was this revolution that happened. Apple released the iPhone in a tie up with AT & T, but shockingly for the telecom industry, it was Apple that called the shots. This was a new type of device with a lot of hype, and hence AT & T would have allowed this. But any such move does set a precedent that Google could easily try and copy:

The company, which has made billions of dollars in Web advertising on computers, is courting wireless operators to carry handsets customized to Google products, including its search engine, email and a new mobile Web browser, say people familiar with the plans. It wants to capture a big chunk of the fast-growing market for ads on cellphones.
Google has invested hundreds of millions of dollars in the cellphone project, say people who have been briefed on it. It has developed prototype handsets, made overtures to operators such as T-Mobile USA and Verizon Wireless, and talked over technical specifications with phone manufacturers. It hopes multiple manufacturers will make devices based on its specs and multiple carriers will offer them.

For Google, the mobile market is the hottest new emerging market, and must be the focus of a lot of strategy sessions at Google headquarters. Carriers have been not so easy to convince, but Google's might and the precedent of the iPhone could change things. If Google does come out with a cellphone, then one would expect more Wi-Fi integration and other methods of browsing, something uncomfortable to carriers since that is outside of their data plans.
The further advantage of having ads on cell phones is that they can be targeted better, and hence Google can ask for and earn more revenue per ad. One thing is sure, Google will do all they can to get an entry into this business, even if it means buying up spectrum and launching itself as a carrier.

Sprint network to use Google Search

Google is already a leader in the Internet Search market, is competing with Microsoft in the desktop search, and now has made an entry in the mobile search market. It has announced a tie-up with Sprint Nextel Corp that will add the Google search and mapping services to Sprint's high-speed wireless network. This is a good deal for Sprint in the sense that Google is a world-leader in the area of search and has an excellent brand name.
Sprint's plan is to create a high speed WiMax network that will be 5 times faster than today's networks, and will cover a city wide area. It can be used by devices other than mobile phones, given that it is actually a wireless network accessible by all devices that support this kind of connection. Once this network is rolled out, it is a service that Sprint will charge for, and Google will be available on the home page of this network.

The agreement gives Reston, Va.-based Sprint the prestige of working with the most popular search engine, along with a source of revenue, West said. For Google, the deal brings a way to extend its search engine into the mobile-device market.
West said Google will pay Sprint as part of the agreement, declining to be specific. Sprint and Craig McCaw's Clearwire Corp. said last week they would use a technology called WiMax to build a wireless network that's more than five times faster than today's standard.

This deal is a big deal for Google. Given the speed with which the mobile platform is proliferating and the increased tendency to build devices that allow for internet access, it is important for Google to be available on this platform. In addition, given that there is a class of devices that use Microsoft's Mobile platform, one can be sure that Google will not be the default search on those devices, so Google needs to network with all other providers and platforms.

Duke and iPhone resolve problems

Earlier this week, there was a major issue over the iPhone apparently causing a Denial of Service attacks on the Duke wireless network, and the issue quickly blew up. Apple would have been in the forefront of attempts to make sure that this issue gets resolved due to the potential bad publicity for the iPhone. Well, it's now blown over, and Apple gets a clean chit:

Initial reports of the problem placed the blame for the outages squarely on Apple's iPhones, which flooded the Cisco WAPs (Wireless Access Points) with thousands of address requests per second. However, in a statement released this afternoon, Cisco Systems admitted that the problem was caused by a Cisco glitch.
The problem could be particular to Duke. Other large universities—specifically the University of Wisconsin at Madison—have not experienced problems with its registered iPhones and Cisco-based Wi-Fi network, according to Dave Schroeder, an administrator in UW's Division of Information Technology. "We have seen upwards of 120 unique iPhones since June 30 on our campus-wide wireless infrastructure, which also uses Cisco 802.11b/g access points. To date, we have not encountered or detected any undesirable behavior from iPhones," said Schroeder. "As I have also not heard reports of errant 802.11 iPhone behavior from any other institution or site, it appears that the issue at Duke may be unique. There may be something unique to Duke's particular wireless installation configuration that the iPhone may be exposing," he added.

Of course, that is something that needs to be investigated further. There is something in the Duke network that was causing the problems to happen, and there is no certainty that such issues will not happen again.
There is an additional comment in the bottom of the article quoted above that could also cause certain problems

"My suspicion is that Duke's network requires Cisco's (Lightweight Extensible Authentication Protocol) security encryption and the iPhone doesn't have that incorporated into it. That could be a source of the problem," said Van Baker, a research vice president at Gartner in San Jose, Calif.
"Cisco's LEAP is an enterprise deployment not seen in the consumer market at all. The iPhone doesn't have a lot of the features you'd normally expect to see in an enterprise class phone," he added.

This was certainly a negative comment by an analyst, and this is something that Apple needs to quickly address. Apple would want this phone to be adapted in the enterprise segment as well, those segments carry a number of phones with them.

iPhone causing denial of service attacks

Could it be too good to be true ? The iPhone is one of the tech marvels that happens once in a few years, and it has shown itself to be a revolution in the designing of phones, although the restriction on carriers and the relatively slow network are acting as hobble-stones.
Well, in the latest news on this area, the iPhones have been caught to be behaving very strangely on the Duke University campus, with around 150 iPhones (a fraction of what would be available once the students come back from holiday) bring several wireless access points to a halt, in an imitation of a Denial of Service attack, probably the last thing that Apple wants to hear at this point:

The iPhone is flooding wireless access points at the US Duke University with MAC address requests, resulting in a denial of service-like attack that is taking out 20 to 30 access points for 10 to 15 minutes at a time – weird! The iPhones are asking for an address that isn’t on Duke University’s network, and when the iPhones don’t get a response, they keep on sending out requests, flooding the available bandwidth.
Help has been sought from Cisco, the maker of the school’s networking equipment, and technical support has been sought from Apple, although there is only speculation online as to precisely what might have caused the problem – Apple isn’t saying anything yet as it no doubt investigates the problem. When the fix inevitably comes, either the iPhone, Cisco’s equipment, or both, will simply be patched with a software update to resolve the problem.

So even though it will probably be a short-lived problem, the fact that such a problem occurred reflects badly on Apple's quality regime. And it is good that it happened at a time when the university was thinly populated, otherwise at peak times and if happening in a number of places at the same time, the problem would have been magnified many times and probably resulted in a loss of face for Apple.

Security company warns against using iPhone's web dialer

The iPhone has a great new feature, and since it is a combination phone and browser, the feature can work really well for most users. But like any other new great feature, there is tremendous capability for misuse, and seeing the ease of misuse, security companies are warning users against using this feature, or to be very careful when using this feature.
What is the feature? Well, the iPhone uses Safari as a web browser. Now, if the web site displays a phone number, all that the user has to do is to click on the phone number in the browser, and the number will get dialed. This is a great feature, but so is the scope for misuse. Imagine the phone in the hand of a neophyte who is viewing some 'interesting' site on the browser, and there is a number displayed along with a catchy slogan. Press the number, and if the number is an international number, or a fraud number, the calls could become very expensive very soon.

Attackers could exploit a bug in this feature to trick a victim into making phone calls to expensive "900" numbers or even keep track of phone calls made by the victim over the Web, said Billy Hoffman, lead researcher with SPI Labs. The iPhone could even be stopped from dialing out, or set to dial out endlessly, he said.
In order for the attack to work, the bad guys would have to either trick iPhone users into visiting a malicious Web site or make a legitimate Web site send untrustworthy information to the iPhone using what's known as a cross-site scripting attack. "Any time someone could control the content that's getting sent to the iPhone [the possibility of an attack] exists," Hoffman said.

It is not as difficult as it looks. It is actually as easy as letting the iPhone be used by a child or by somebody else who is not so experienced, and it is not difficult to create a site that will look attractive and feature this kind of mischief. But as of now there is no way to prevent it, so being careful is the only good way of dealing with this problem.

iPhone: The hacking race begins

In the past, there was a great market for cracking the service linkages of phones. The concept being, SIM based GSM phones in many countries are locked to service providers. They are much cheaper than their cost because of the service conrtract, with a subsidy being provided by the telecom carrier such as AT&T, SPrint, etc. This subsidy is provided because the contract normally locks the user in for a 2 year conract, and the company can recover the subsidy during this period.
The iPhone is a somewhat different model. AT&T does not provide any subsidy for the iPhone, with the full cost of the phone being the amount charged ($499 for a 4 GB one, and $599 for a 8 GB one); but Apple, presumably in a bid to repay AT&T over the allowances allowed to Apple while designing the phone prevents another SIM from being used in the phone. In addition, no functionality of the device such as music playing, video, camera, etc can be used without activation (which can only happen with AT&T in the US - and not yet allowed outside the US).
Thus the cat and mouse game between a company and hackers has now begun. The iPhone is a prime target for hackers and crackers, many seeing it as a game / test; and many seeing it as something worth a great deal of money. When Apple would have designed the phone, it would have been a priority to set the security of the phone such that the protection would have difficult to crack:

Locked phones can only be used with cellular service from one carrier, a move designed to guarantee carriers recover the cost of subsidizing a handset through monthly service charges. But the cost of the iPhone, which is priced at either US$499 or $599 depending on the model, is not subsidized by AT&T. Users must pay full price for the handset and sign a two-year contract, which requires them to pay from $59.99 to $99.99 per month for cellular service.
Unlocking the iPhone will enable the handset to be used with any cellular provider with a GSM (Global System for Mobile Communication) or EDGE (Enhanced Data Rates for GSM Evolution) network, not just AT&T's network. That's an attractive proposition for users who already have a cellular contract with another carrier, or users outside the U.S. who can't wait to get their hands on Apple's new handset.
Efforts to unlock the iPhone are being tracked on several Web sites, including Hackint0sh and the iPhone Dev Wiki.

This is also something that is a bit odd. If users are being made to pay the full amount for the phone, then they should be able to use the phone at their discretion. It is understandable if the iPhone was subsidized, in which case the service provider locks the phone until the subsidy has been paid. But to lock the phone till activation and prevent usage of other functions is very strange, and once could argue, an extra charge that a user has to bear for having the iPhone. Especially because the AT&T network has been shown to be a slow one, and limiting the speed of wireless browsing.
It is bound to happen sooner or later that the unlocking scheme will fail, and when that happens, it will be a pretty simple job to do this in mass. That will be time when the world proliferation of the iPhone begins.

The iPhone finally on sale

Finally, one of the most-awaited devices is on sale, and as expected, there are long queues waiting to buy the phone. But with prices of between $1,100 and $2,000 being quoted on Craiglist and eBay, it is an open question as to how many people are waiting to get it first and then immediately sell it, as opposed to those who are waiting to be one of the first to get their hands on it for personal use. Anyhow, the initial response would be good news for Apple. The iPhone is a major business milestone for Apple, and the success or failure (not meeting projected targets) would have a major impact on Apple.
If Apple can show the iPhone as a major success, they will be known as the company with a Midas touch, in tune with customer requirements and on the bleeding edge of design. If, however, there is a failure, then things will move the other way. The Apple stock, that has gone by more than 200% in the last couple of years will show the impact as well. Of course, as the example of the Playstation3 shows, it will only be with the passage of time that success or failure can be measured. Right now, it is the device fetching customers to shops:

Take San Francisco resident Jerry Taylor, 54, who was first to buy the iPhone from Apple's store near Union Square. After a brief moment in the media spotlight, he said he was selling the device, apparently to a mysterious man with a Scandanavian accent who stood next to Taylor, but who declined to give his name. In spending more than $650 for the gadget, including taxes, Taylor said he was "gambling with this month's rent."
In case you're one of the few who haven't heard, the iPhone is Apple's first attempt at a cell phone. Hyped for months - even years - the device is built around a large, touch sensitive screen, which takes the place of a physical keypad. Apple CEO Steve Jobs and a coterie of analysts, consumers and enthusiasts have predicted that the device will change the cell phone industry as much as Apple's Macintosh computers and iPod MP3 players changed the PC and music businesses, respectively.

It could be similar to what the iPod has turned out to be. The iPod is more expensive than most other music players of its category, but yet is an incredible success, chiefly because it has an incredible reputation. It is known as having an excellent design, with a great brand value and with a complete service infra-structure including good integration with a music purchase and download process (iTunes and store).

T-mobile allows cheaper calls through Internet

T-mobile has come up with a new concept to allow reduction of call plans overall cost, by allowing the use of alternative calling networks. What does that mean ? For a T-mobile user, if they have bought one of the 2 new handsets, and are either in a home wireless network or a Wi-Fi hotspot, they can move to using that mode of Internet access for their phones. This will typically prove to be much cheaper than the costing of a regular call plan.
Another plus promised in this new service (T-Mobile HotSpotAtHome) is the ability to get a much better coverage inside homes, something that a lot of customers typically complain about:

The service is the first time a cell phone carrier is using Wi-Fi to make calls. That could lead to a shift in the cellular industry as more operators begin to build dual-mode technology into phones, allowing people to cut down the cost of voice minutes.
To get HotSpotAtHome, T-Mobile customers will need to buy one of two $49 phones that can switch between cellular and Wi-Fi calls. In addition to paying for broadband, they will need to pay for the calling service, which can be added to cell phone service initially at $9.99 a month for unlimited Wi-Fi calls. After mid-September, customers will pay $19.99 a month to add the Wi-Fi service.. Family plans for up to five phones are available now for $19.99, then go up to $29.99 in September.

The handset is new, but the wireless router at home can be an existing router. There is switching between when a customer is making the call in a Wi-Fi area and then moves outside this network and onto the regular cellular network. People who have tested this service have found that it works well.