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January 29, 2008

One Million Unlocked iPhones: Beautiful.

Duncan Riley

32 comments »

iphone5.jpgAccording to a new report issued by Bernstein Research analyst Toni Sacconaghi, one million iPhones of the 3.75 million sold have been unlocked to run on non-official networks.

A debate over Apple’s sales figures has raged this past week after it was revealed that AT&T had only activated 2 million iPhones, and only 315,000 iPhones had been purchased in Europe, leaving a gap of 1.435 million. Some earlier reports suggested that the majority of the missing iPhones may be sitting on shelves, but this new report puts a completely different light on the figures.

According to The Register, unlocked phones “represent a significant drag on the profitability of the device” with Apple “receiving $300 to $400 in carrier payments for each iPhone sold, they generate 50 per cent less revenue and up to 75 per cent less profit than normal. The 1m phones translates into as much as $400m in lost revenue.”

In perspective, the figure is small in comparison to the earlier report this week of PirateBay having over 10 million users, and yet unlocking an iPhone isn’t as easy as downloading a pirated movie or album. It’s also not illegal, at least in most countries. That one million people would rage against the machine and unlock iPhones is a beautiful figure that must surely go some way towards proving that locked devices and standards are a flawed idea. We’ve seen DRM defeated as the music industry realized that consumers want open, flexible standards. Mobile phone operators are the next in line in the domino affect of open that is now sweeping all corners of technology. Apple is expected to sell 10 million iPhones by the end of 2008, and on this basis that would mean slightly over 2.5 million unlocked iPhones. Steve Jobs long argued against DRM, so lets see whether he will eventually concede that an open iPhone is a smart idea as well later in the year, and even if he doesn’t, people will still keep unlocking iPhones. Now if only I could find a way to upgrade from 1.0.2 to 1.1.3 and keep my iPhone working in Australia :-)

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This entry was posted on Tuesday, January 29th, 2008 at 3:42 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. LiveCrunch

    January 29th, 2008 at 5:31 am

    You Can unlock your phone I just wrote the article about it the other day :) btw move to Europe :)

  2. Chris Sack

    January 29th, 2008 at 5:36 am

    “Now if only I could find a way to upgrade from 1.0.2 to 1.1.3 and keep my iPhone working in Australia”

    I have the opposite problem to you, I need my 1.1.3 to 1.0.2 so I can jailbreak it.

  3. Kyle S.

    January 29th, 2008 at 5:37 am

    Hmmm… that figure for the lost-revenue is grossly exaggerated. Apple has more than likely gained revenue because people unlocked iPhones.

    Think of it this way:
    * Many people are unlocking iPhones because they don’t have AT&T (e.g., Australia)
    * If they couldn’t unlock it, they wouldn’t buy it
    * If they didn’t buy it, Apple wouldn’t get ANY profit at all

    Hence, unlocking iPhones yields sales which yields… profit, not a loss ^_-

  4. Steve Jagger

    January 29th, 2008 at 5:40 am

    I agree with Kyle. I’m in Canada with an unlocked iPhone, and if it couldn’t be unlock I would not have bought it.

  5. Carl

    January 29th, 2008 at 6:08 am

    What a joke.

    Unlocked iPhone’s do not represent lost revenue for Apple. That is revenue they wouldn’t have otherwise gained because the user likely would NOT have purchased one otherwise. They obviously didn’t want to switch to the iPhone’s carrier.

    Apple gains revenue for every iPhone sold regardless if it is unlocked or not. They just earn more money if it is used as intended. If is AT&T that is the loser in when it comes to unlocked iPhone’s.

    I love how analysts and reporters make idiotic statements like that and then cause the stock price of a company to drop or suffer because of it.

  6. Lars Fischer

    January 29th, 2008 at 6:26 am

    They would make much more revenue if the iPhone was sold unlocked.

  7. Sam I Am

    January 29th, 2008 at 6:46 am

    The problem is not getting these suckers on shelves in the rest of the world fast enough. There’s only so much Apple fans will put up with till they just have a friend ship them one from the US and hack it to get it working where they live. If one had been available in Norway I know I wouldn’t have gone to the trouble…. even if it did cost me more. This is the real mistake; we live in a global economy and the US dollar is worth s**t at the moment. The math works out no matter where in the world you are and even including courier costs, turbosim, whatever. Especially when you factor in having one earlier than others.

  8. Martin

    January 29th, 2008 at 6:47 am

    You will find everything you need to upgrade to 1.1.3 here: http://www.modmyifone.com/

  9. Dan

    January 29th, 2008 at 6:48 am

    Re: Lost revenue…

    They may well be losing money on each unlocked phone, as the cost of producing each phone may be higher than the standard price… with Apple making up the difference on the revenue share with AT&T (And other networks around the world).

  10. Duncan Riley

    January 29th, 2008 at 7:03 am

    Martin
    bzzzz “You must have a 1.1.1 or 1.1.2 jailbroken iPhone already for this to work (or jailbreak yours). Doesn’t help me at all, and your comment looks like spam :-)

  11. Donovan

    January 29th, 2008 at 7:18 am

    I am pretty sure these numbers are out to lunch, the one thing these articles do not mention is that you have not been able to easily unlock iphones for a while, since 1.1.2 came out you can only jailbreak them, to unlock them you need a hardware solution…

  12. Erik

    January 29th, 2008 at 7:20 am

    Well this is not going to help Apple’s falling stock price much.

    The 10 million goal is also looking risky. At the end of the day the smart phone market is just not that big.

  13. Borris

    January 29th, 2008 at 7:32 am

    “That one million people would rage against the machine…”
    did you choose to use the phrase rage against the machine because of the band’s recent Australian tour, or was it just a coincidence?

  14. Bobs Your Uncle

    January 29th, 2008 at 8:30 am

    Then Apple should sell the unlocked version for $400-$600 above the current price to recoup the “lost” the lost revenue in non-ATT markets.

  15. J.P.

    January 29th, 2008 at 8:44 am

    Duncan, check this: http://lifehacker.com/349691/o.....3-firmware

  16. ox

    January 29th, 2008 at 10:19 am

    Question-

    Is there an underground company buying, converting, and selling these unlocked phones? b/c 1mm “unlocked” (firmware or software) phones seems like a lot. seems like more than just casual or apple enthusiasts… 1 of every 3.75 phones open and not used on ATT or O2/Tmobile? that just doesnt seem right to me.

  17. joan

    January 29th, 2008 at 10:20 am

    Keep an eye what happens in Belgium where it’s illegal to sell a phone and a mobile service together in one deal.
    You are not allowed to do something like that.
    You have to seperate the two!
    There’s no iphone in Belgium right now.
    People buy one in the US (dollar is extremely low) and they unlock it.
    What’s Apple going to do?
    While I agree Belgium is a small market, I don’t think they will let a competitor move in and take all the money.
    I’m not saying there’s a good alternative. Eventually they will have to sell it unlocked.

  18. Kenneth

    January 29th, 2008 at 11:20 am

    Do you really believe that 25% of all Iphones owners have the technical ability or desire to hack the Iphone? The chances are better that the books are cooked. These numbers are flawed.

  19. Fred

    January 29th, 2008 at 11:34 am

    Apple can’t lose. Use the logic proof method, Reductio ad absurdum. If the number of unlocked iPhones is really large, it means a really large increase in unit sales, which increases total sales, and drives down unit cost to further increase profitability. And, most customers would rather not make the extra effort to hack while simultaneously losing the perceived value of support. Finally, people are buying iPhones and hacking them to get the iPhone service in countries where it does not exist. This creates a guerrilla marketing campaign going to spur new Service Providers to sign up with Apple.

    And who knows, Apple and ATT may see the wisdom and reduce their surcharge.

    Hey, didn’t Steve Jobs trade in blackboxes in college that allowed you to make free long distance calls on ATT’s dime?

  20. fizetés + állás

    January 29th, 2008 at 11:44 am

    it was clear in advance, that in countries where AT@T is not present, and iPhone is not sold, people also use the net and want this device

    so, fo course, they find a solution

    it is Apples’s fault I think

  21. ox

    January 29th, 2008 at 12:16 pm

    These numbers seem WRONG.

    In the US, if you unlock to run on another network, you can only run the iPhone on another GSM network (I think t-mobile is only other in US). Who is doing that? is T-mobile US experiencing a sudden increase in new sign-ons?
    Then most of these unlocked phones are be going Int’l… BUT THERE’S NO WAY 1mm phones have been purchased here in the US (orig price plus ATT/Cingular 2 year contract) and then shipped unlocked to Europe for someone to buy…

    These numbers dont seem right at all to me

  22. rubu

    January 29th, 2008 at 12:22 pm

    Unlocked iPhone’s do not represent lost revenue for Apple. That is revenue they wouldn’t have otherwise gained because the user likely would NOT have purchased one otherwise. They obviously didn’t want to switch to the iPhone’s carrier.

  23. BinaryDay

    January 29th, 2008 at 12:57 pm

    some really great insights about how unlocked iphones, increase apple’s profits. Me impressed, by the comments ;-)

  24. Brian

    January 29th, 2008 at 1:49 pm

    I dont blame any of the “un-lockers”….the phone is just toooo tempting to just work just for AT&T ……

    bookmarked @ htto://livbit.com

  25. Nemrut

    January 29th, 2008 at 3:56 pm

    ..now if someone could just get Skype to work i’d gladly splurge for this beautiful, yet otherwise, useless paperweight ;-)

  26. Michael Vu

    January 29th, 2008 at 6:09 pm

    not surprised, at all.

  27. alex kwiatkowski

    January 29th, 2008 at 9:25 pm

    Duncan you can unlock your phone in AU. I am running on vodafone v1.1.3 firmware.

    1. If u have a 1.02 phone and used the anysim or other similar method to unlock, you need to reflash the baseband. Just look up iPhone revirginizer on google.

    2. U then need to upgrade the firmware to 1.1.1, then upgrade to 1.1.2

    3. Jailbreak the 1.1.2 phone and run the anysim unlock for 1.1.2

    4. Upgrade to 1.1.3 using the hacked fw (The latest ibrickr does this for u but there are a couple of ways now)

    5. Finished. The hacked 1.1.3 fw retains the unlock. It also fixes the annoying keypad bug if the region was set to Australia.

    If u need more info u can drop me an email.

  28. =jason

    January 30th, 2008 at 12:40 am

    im in hong Kong right now and there are surprisingly a lot of iphones here. Every market I go to is selling them and i have encountered at least 20 people in one day with it. All unlocked..

  29. Alex Linhares

    January 30th, 2008 at 9:20 am

    Unlocked iphones go for USD1.100 over here in Brazil. And there’s no way you can step into a cool bar and see everyone showing their new gadget off.

    Apple should have sold this thing worldwide from the start; perhaps Jobs might learn something about the dollar and the US during the next years of stagflation and recession.

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