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Firmware update 1.1.1 will relock user's iPhones and force them to activate with AT&T.  (Source: Apple Inc.)
Apple has released its new firmware update, which alters unlocked iPhones

Those rushing in droves to unlock the Apple iPhone may be in for a surprise when they try out Apple's newest firmware update; version 1.1.1.

Apple released a statement earlier this week that, "Apple has discovered that many of the unauthorized iPhone unlocking programs available on the Internet cause irreparable damage to the iPhone's software, which will likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed."

Phil Schiller, Apple's senior vice president of worldwide product marketing, claims, "This has nothing to do with proactively disabling a phone that is unlocked or hacked.  It's unfortunate that some of these programs have caused damage to the iPhone software, but Apple cannot be responsible for ... those consequences."

It turns out that the reports are true -- somewhat.  Apple released its controversial iPhone firmware update yesterday.  Among its new official features:

• iTunes Wi-Fi Music Store
• Louder speakerphone and receiver volume
• Home Button double-click shortcut to phone favorites of music controls
• Space bar double-tap shortcut to intelligently insert period and space
• Mail attachments are viewable in portrait and landscape
• Stocks and cities in Stocks and Weather can be re-ordered
• Apple Bluetooth Headset battery status in the Status Bar
• Support for TV Out
• Preference to turn off EDGE/GPRS when roaming internationally
• New Passcode lock time intervals
• Adjustable alert volume

iPhone unlocking has become very widespread, thanks to two key software offerings:  iPhoneSimfree and anySIM.  These programs "unlock" the iPhone and allow it to work on T-Mobile's compatible EDGE network.  In foreign countries, unlocking the phone's SIM card to other networks is the only way to currently enjoy phone service outside the U.S.  AT&T only provides service within the U.S.  England, France, and Germany are all getting dedicated providers in November, but until then or in other countries, there is no way to use the iPhone without unlocking it. 

It is unknown how many unlocked users there are but with over a million iPhones in the wild there is likely a substantial number.  The iPhoneDev group, based on the number of people who downloaded their software, thinks there are "several hundred thousand" users of unlocked iPhones-- a figure Piper Jaffray's Gene Munster takes as a rough upper bound. "Even if the average hacker downloads the software twice, that's still over 100,000 hacked," he says. "The story is far from over."

Apple CEO Steve Jobs has publicly denounced iPhone unlocking, saying Apple vowed to fight it and that "It's a constant cat and mouse game."

Firmware update 1.1.1 works perfectly on normal iPhones, with no reported issues, as expected. 

The update also does not destroy unlocked iPhones, contrary to what Apple indicated might happen.

It does however render them useless, unless you are willing to get an AT&T contract. and any other unlocking associated software is rendered useless by the update, as well.  It is still in the stored on the phone, but the application will no longer appear on the screen.  Further, the update puts unlocked iPhones into the Activation screen that awaited normal users when they first purchased their phone.

At the activation screen, users can try to activate using a valid AT&T activation card and iTunes.  The update appears to render iPhones unlocked by certain modification programs unable to activate at all, according to early reports.  For these applications, users replaced the unlocked SIM card with a fresh one to no avail. 

The program IPhoneSimfree allows iPhone activation with the AT&T card and iTunes, according to a statement from the software providers.  After activation, the iPhone will operate as normal, but will be locked to the network.

It has not yet been fully tested whether the phone can subsequently be unlocked by any means without at least partially crippling the device.  Part of unlocking software's operation relies on updating the seczone region of the phone's memory.  The firmware update apparently clears any updated values and restores the memory to its default configuration, relocking the phone to the AT&T network.  Further, the firmware update may have additional changes to help prevent this zone of the memory from being accessed.

iPhone users on 3rd-party networks should not install the 1.1.1 update if they wish to continue to use a non-authorized network.  The update is voluntary, so there is nothing stopping you from not doing so.

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By acer905 on 9/28/2007 3:12:44 PM , Rating: 5
... Reading the title of this article, all i can think of is the Imperial Deathmarch...

Seriously, this is so gonna tarnish the glistening reputation Apple has.

RE: Title
By acer905 on 9/28/2007 3:14:53 PM , Rating: 4
... And now after commenting, i look at the pic... lol

RE: Title
By CCRATA on 9/28/2007 3:15:24 PM , Rating: 5
no it won't. Apple Fanboys would let Steve Jobs piss on them, and they would still praise him as lord ans savior.

RE: Title
By acer905 on 9/28/2007 3:19:02 PM , Rating: 5
I don't know, in the article that first mentioned this possible killer update, there weren't really any fanboys trying to protect Apple... it was pretty much an Apple bashing festival...

RE: Title
By darkpaw on 9/28/2007 4:36:31 PM , Rating: 5
Some Apple fan boys posted on the Computerworld website that this was a good thing and actually got voted down. I think thats the first time I've seen Apple freaks actually get negative ratings on that rather Apple friendly site.

This sorta thing is the crap Apple has been pulling for years, its about time more people are noticing.

RE: Title
By FNG on 9/30/2007 3:27:27 PM , Rating: 2
But that is really the issue, now there are plenty more Apple customers than Apple fanatics. Regular customers like their products, but plenty of competitors are or will produce similar products that are good enough.

RE: Title
By Flunk on 9/28/2007 4:21:01 PM , Rating: 5
It is fun to see Apple acting like the evil empire they constantly accuse Microsoft of being (to be clear I am not saying anything about Microsoft here, just Apple).

If you are a Cell phone manufacturer, why do you care which provider people use your product on? Wouldn't it be better for you to allow people to use it on any provider, so you can sell more?

Wait a sec, isn't AT&T paying them for the right to sell Apple's product? Doesn't that sound a little big like an illegal monopoly?

Apple treats their customers terribly, that is more than enough reason to avoid buying their products. At the prices they charge they should be providing premium levels of service to back up their premium priced products.

RE: Title
By Hare on 9/28/2007 4:37:51 PM , Rating: 2
If you are a Cell phone manufacturer, why do you care which provider people use your product on? Wouldn't it be better for you to allow people to use it on any provider, so you can sell more?

Apple gets 40% of every iPhone phone bill (O2 operator). I'd say the answer to your question is pretty obvious :)
Doesn't that sound a little big like an illegal monopoly?
Not at all. Apple simply has a product that operators want badly and are willing to pay for exclusive rights.

RE: Title
By phattyboombatty on 9/28/2007 4:56:30 PM , Rating: 2
Apple gets 40% of every iPhone phone bill (O2 operator). I'd say the answer to your question is pretty obvious :)

If a consumer purchases an iPhone in an area where AT&T coverage is not available, Apple is not missing out on any lost profits from the phone bill, but is gaining the profit margin from the sale of the hardware. From Apple's perspective, they only stand to gain from iPhone sales to consumers that would not have purchased the iPhone but for the unlocking software.

The more likely reason that Apple is fighting the unlocking of iPhones is because they are contractually obligated to do so by AT&T.

RE: Title
By mdogs444 on 9/28/2007 5:07:12 PM , Rating: 2
Doubtful. If they get 40% of a $60 monthly bill - on a 2 year contract, they would get roughly $288. Thats more profit than what they would get with an idividual iPhone sale. If they allowed them to be sold on all networks, they would get no kickbacks, and only make the profit from the sale of the phone itself.

RE: Title
By energy1man on 9/29/2007 5:29:21 PM , Rating: 2
$288 for the year, $576 for the 2 year contract.

RE: Title
By Hare on 9/29/2007 4:29:32 AM , Rating: 3
You are forgetting that AT&T is not alone. There's also Orange, O2 and T-mobile. Hello, over here. On the other side of the ocean ;)

Apple has two reasons for this.
a) get profits from phone bills
b) avoid getting sued by the megaoperators.

RE: Title
By Griswold on 9/29/2007 6:33:31 AM , Rating: 2
I dont think its 40%. T-Mobile in germany is said to give apple 10%.

RE: Title
By Hare on 9/29/2007 9:43:14 AM , Rating: 2
Try this,

Google: "O2 iphone 40%"

The guardian is reporting that Apple can command a 40% revenue share over whatever O2 (a UK wireless operator) will make from iPhone users...

RE: Title
By Flunk on 9/29/2007 1:03:12 PM , Rating: 2
Do you know what a rhetorical question is?

RE: Title
By Hare on 9/29/2007 3:44:10 PM , Rating: 2
Which one was the rhetorical question? Sorry, english is not my native tongue so I could have missed something... Then again, sarcasm/rhetorics is quite difficult to pick out of plain text.

RE: Title
By mdogs444 on 9/28/2007 4:41:49 PM , Rating: 2
Before I start commenting - Just know that I do not have an iPhone, or any apple products, nor do I plan on it. I have a zune and use windows vista and am quite happy with

If you are a Cell phone manufacturer, why do you care which provider people use your product on? Wouldn't it be better for you to allow people to use it on any provider, so you can sell more?

The reason the cell phone manufacturers - at least in the case of apple - care which provider uses their phones is simple. They are getting major, major kickbacks from the service providers. AT&T is paying apple a portion of the monthly service charges just for being able to retain exclusive rights to the iPhone. Service providers across Europe are doing the same thing, and I believe getting even larger kickbacks. The kickbacks that they make on a single service contract is probably a larger profit than just the cell phone profit itself. If the phone was available everywhere for every provider, why would the providers give kickbacks?

Wait a sec, isn't AT&T paying them for the right to sell Apple's product? Doesn't that sound a little big like an illegal monopoly?

I dont quite understand why that would be illegal. Its the same as microsoft and sony paying game makers to only allow the game to be played on one exclusive console. Also, that has nothing to do with a monopoly, and not to talk down on you, but I think you should look at what the real definition of a monopoly is. A real instance of a monopoly would be if every service provider only carried the iphone and nothing else, thus forcing you to buy an iphone if you want a cell phone.

Apple treats their customers terribly, that is more than enough reason to avoid buying their products. At the prices they charge they should be providing premium levels of service to back up their premium priced products.

This part i am not too familiar with because i dont own any apple products, but im not sure what you mean by treating their customers terribly. From what i read, people who purchase apple products and services continue to do so because they feel they are getting their moneys worth, at least is my guess. But like i said, i dont have any of their products or services, so i am not going to comment on how bad they are because i dont have first hand experience.

RE: Title
By rcc on 9/28/2007 5:03:28 PM , Rating: 1
This is foolish. Apple, or anyone else, has no responsibility to maintain compatiblity with anyone's hacks. They couldn't if they wanted to. All they can do is restore the phone to the way it was, and update it.

Rather like updating cd cracked games, you don't update the game until the new crack is out, if you want to keep using it w/o a cd.

It boggles the mind that anyone would have expected anything else.

RE: Title
By darkpaw on 9/28/2007 5:22:48 PM , Rating: 5
Problem is, they're not restoring the phone to the way it was. They are intentially breaking the phone if an unlock hack was installed to the point where it can't be reactivated at all (in at least some reported cases). Apple is screwing people over big time just because they excersied their legal right to unlock the phone.

RE: Title
By mdogs444 on 9/28/2007 5:25:58 PM , Rating: 2
I know everyone has multiple views - but unlocking the phone by modifying the firmware has not yet been proven in court to be legal.

I'm not saying that it shouldnt be legal - but until this goes to court, if it goes to court, i think we should hold off and let the legal system take its necessary course.

RE: Title
By bangmal on 9/30/2007 12:06:38 AM , Rating: 4
maybe you should learn more common sense. Things do not need to be proven legal to be legal, as long as it is not written on the law books as illegal then it it is legal, no proof is needed.

RE: Title
By mdogs444 on 9/30/2007 12:27:15 AM , Rating: 2
Unfortunately, you would not make a good lawyer.

It has not been written in the law that Apple did anything wrong. Whether you or I agree with the methods that were performed dont matter.

RE: Title
By rcc on 9/28/2007 5:33:45 PM , Rating: 2
I haven't disassembled an iPhone, but I'm guessing the software is actually firmware blown into some form of non-volatile memory. When applying a patch to something like that, you generally write over the whole thing, effectively restoring it to the original config, plus the update.

Perhaps the iPhone's OS and software is complex enough that they actually do selective patching, even so why would anyone expect a hack/crack/patch based on a older version to still work.

RE: Title
By Samus on 9/28/2007 8:24:49 PM , Rating: 3
Why does Apple care if the phones are being unlocked? It works in there favor on so many levels!

1) They sell more overpriced hardware
2) Unlocking voids the warranty, so if the phone fails for any reason Apple isn't even responsible to fix it.
3) The kickbacks from providers don't outweigh 1 and 2.

RE: Title
By mdogs444 on 9/28/2007 8:41:26 PM , Rating: 3
I believe the kickbacks do outweigh the 1 & 2. They get around $300 minimum for a 2yr contract on an AT&T customer. They'd have to sell 3x as many phones as they do now without the kickbacks. Also, realize that the kickbacks they are getting in Europe are up to 70% as some articles have shown. Thats massive.

However, thats my opinion, and neither you nor I have the ability to see what the actual figures are, only apple does.

But in the event that you are right on #3, they could be sued for breach of contact from the service providers who they have contracts with and be forced to pay such an astronomical amount. They have to show the service providers that they are trying to do everyitng in their power to honor the contract.

RE: Title
By Proteusza on 9/29/2007 7:43:15 AM , Rating: 4
Whoever says Microsoft is worse than Apple doesnt have a clue what they are saying.

Apple will go to some lengths to proactively disable phones that it wont receive revenue from (since Apple gets a share of the subscription you pay to AT&T). Very greedy.

RE: Title
By afkrotch on 9/30/07, Rating: -1
RE: Title
By BMFPitt on 10/1/2007 9:40:02 AM , Rating: 2
Ya, way different from Microsoft making it so users all over the world can't download shows or movies from Xbox Live Marketplace.
Yes, it is way different.

RE: Title
By Locutus465 on 9/30/2007 2:09:02 AM , Rating: 1
I wonder whether Apple might face a class action law suite regarding this update... I'm not completly familiar with the details of the law, but I do know that cell customers were recently granted the right to unlock their phones and take them to another network... I'm not sure whether Apple has a legal defence to fight unlocking... I could be wrong though, like I said I don't fully understand the law (as I've never been tempted to unlock my phone).

RE: Title
By ryedizzel on 9/30/2007 7:27:34 PM , Rating: 3
I am a neutral reader on this situation since I do not own any Apple products and I have to agree with everything that 'mdogs444' is saying.

Apple has an exclusive obligation to AT&T, so its their job to make sure their technology is designed in a way to protect that obligation. It's that simple!

If unlocking the iPhone was a joke and people could use it on any network they want then why would any company bother entering into an exclusive contract with them. Think about it, would you pay Apple a percentage of your monthly profits when another company that is NOT involved in a contract doesn't have to?

RE: Title
By Locutus465 on 10/1/2007 9:15:16 PM , Rating: 2
I agree that apple has contractual obligations to try and fight this, but my (apparently dispised post) centered more on the legalities... Obviously cell phone service providers and cell phone makers want to lock you into a network, it's better all around business. I was wondering, however whether new regulartions protected customers rights to take their phones to a new carrier in this case, or if they did not.

If indeed the law protects the customer in this case, then AT&T & Apples contracts won't mean much. If indeed they do not, then obviously Apple is making the right business decission and people who unlock their phones should quit crying foul. Like I said, I'm not familiar with the particulars as I've never wanted to take a phone to a different service provider, I've seen some posts here to the effect that the laws might not apply, but I'm sure it will take law suites to find out for sure (and I'm sure there will be some).

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