Back in 1971, Steve Jobs and Steve Wozniak (founders of Apple Computer Inc.) went into business to build ‘Blue Boxes’. A device that allowed free illegitimate phone calls by faking the signals used by AT&T (Apple’s exclusive network carrier). In the picture, you can see Steve Jobs with a ‘Blue Box’.
From Wikipedia:
An early freaking tool, the blue box is an electronic device that simulates a telephone operator’s dialing console. It functions by replicating the tones used to switch long-distance calls and using them to route the user’s own call, bypassing the normal switching mechanism. The most typical use of a blue box was to place free telephone calls - inversely, the Black Box enabled one to receive calls which were free to the caller. The blue box no longer works in most western nations, as modern switching systems are now digital and no longer use the in-band signaling which the blue box emulates. Instead, signaling occurs on an out-of-band channel which cannot be accessed from the line the caller is using (called Common Channel Interoffice Signaling (CCIS)).
The Apple Founders not only built those devices, but Steve Jobs also sold them to his fellow students at the University of California, Berkeley. Allegedly they demonstrate the product by making prank calls.
From Wikipedia:
Some of the more famous pranksters were Steve Wozniak and Steve Jobs, founders of Apple Computer. On one occasion Wozniak dialed Vatican City and identified himself as Henry Kissinger (imitating Kissinger’s German accent) and asked to speak to the Pope (who was sleeping at the time).Blue boxes were not just the domain of “pranksters” and “explorers”; others (such as the Mafia) used blue boxes solely to make free phone calls for criminal purposes.
Steve Jobs is a true visionary, he is the man who sees the future. Why would he go behind his fellow hackers to stop them from unlocking iPhone? Evidently, iPhone unlocking is in Apple’s interest.
Apple’s core business is hardware and it relies on the sales of its products. The iPhone is gateway for Apple like iPod, which will help them to increase in brand popularity and more hardware sales. Apple needed a carrier to launch iPhone and they signed up with AT&T with an undisclosed revenue sharing deal. The revenue generated from AT&T subscriptions won’t be a significant amount compared to the revenue from hardware sales.
It is AT&T who is more worried about iPhone hackers, not Apple. That’s why AT&T lawyers went knocking on the doors of iPhone hackers while Apple took a “neutral†stance on the unlocking issue. Unlocking a cell phone is legal and not a violation of laws.
Apple can’t stop anyone from unlocking any a cell phone. But, it is obliged to make iPhone as “unhackable†as possible because of the exclusivity deal with AT&T. At a recent Apple event in London, Jobs tactfully acknowledged with his statement “It’s a cat-and-mouse gameâ€. It is evident that Apple is in the ‘mouse’ position in current scenario and they are ready with a new firmwire version which will lock the iPhones again to make AT&T and O2 happy.
We know there is no such thing as “unhackableâ€. Sooner or later, iPhone hackers will be able to hack and supply an upgrade version of their software to unlock the newer firmware versions. The cat-and-mouse game will continue, customers with unlocked iPhones will be able to upgrade with the newer version of firmware once the updated unlock solution comes out.
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September 24th, 2007 at 8:50 pm
Why make unqualified statements like “The revenue generated from AT&T subscriptions won’t be a significant amount compared to the revenue from hardware sales.”
From what many speculate, Apple my make $350 / iPhone from ATT over two years. That’ll be 30-50% of the total revenue from an iPhone sale. Nothing to sneeze at.
September 24th, 2007 at 8:56 pm
@jeffiel :
The subscription Revenue is not a significant amount for Apple if compared to the boost in iPod & Mac hardware sales they received because of the iPhone hype.
They sell more iPhones if people unlock it, both home and abroad.
September 24th, 2007 at 9:01 pm
I am a hypocrite, that is why you cannot hack my precious iPhone. I used to steal from AT&T, now we are partners and steal from our customers.
September 24th, 2007 at 9:13 pm
The AT&T of 1971 and the AT&T of today have so little in common it’s not funny.
September 24th, 2007 at 9:28 pm
I think if they wanted to sell more phones, they wouldn’t try to keep them on one network. Relying on the fact that someone will hack the phone and then get that hack to millions of people is kind of a scary way to do business in my opinion. I think that the money Apple is going to make through cell phone service is going to be a good amount. Why else would they hurt their direct hardware sales by restricting the use of the phone (if you could use in on any network, they would sell so many more) unless the kickback was enough to make up for it?
September 24th, 2007 at 9:48 pm
Levi, cell phones are exclusive to wireless carriers. That is how they make money and to entice new customers. Most big phone makers are on a contract to only use a few carriers. Nokia, Moto, Samsung, etc. That is why you don’t have general unlocked phones. If the carriers did not restrict this access, there would be no need for “unlocked phones”
Apple is in the same boat. Do you really think that they would not want to have a iPhone on every major wireless carrier? Corporate greed at it’s finest.
September 24th, 2007 at 9:56 pm
Actually, when you think about it, Apple makes the most money by outwardly entering into an exclusive relationship with AT&T but not fighting too hard to keep the phone locked. They end up with both the kickback from AT&T and the added sales to users on outside networks. It’s likely that the kickback makes up for the potential customers who don’t buy a phone because they can’t/won’t unlock it, but I doubt the money would make up for a total loss of sales to other carriers.
September 24th, 2007 at 10:00 pm
Apple makes a very small profit on iPods, and computers, I don’t know what wholesale is on the iPhones, but since they are only available through Apple Retail, Apple Online, and AT&T, in most cases Apple gets to double dip the profits of Retail and Wholesale. I would say the AT&T revenue sharing is a big deal. I used to work for Cingular, and let me tell you the revenue sharing for each store, and commission for some private cell phone franchises is huge.
September 24th, 2007 at 10:16 pm
I think you’re mistaking the innocence and bravery of youth for the Steve Jobs that now stands today. He’s repeatedly shown that he’s not interested in hacker groups or even in what people want. Don’t forget how closed off the Mac was originally, he never wanted the common user to modify it. Look at how little Apple has contributed to Open Source, even while proclaiming the BSD kernel at the heart of OS X. Apple is always double sided. As a hacker, i buy Apple because it’s aesthetically pleasing and interesting to mess with. I have no illusions that Steve Jobs is in favor of my tinkering. If he was, he would have just published the source code and the schematics of everything. Woz was the hacker of the blue boxes, Steve Jobs was interested in making a quick buck and maybe a few jokes.
September 24th, 2007 at 10:22 pm
Wow.
Listen, this is a blatent case of bias. Steve jobs was much less a hacker than Woz. Steve Jobs was a salesman. More importantly, a Salesman with technical knowledge. Woz was the guy who made it happen, even in the later days with Apple. Jobs soldered chips, and did the selling. So, he was a CEO/Factory worker.
That was also 30 years ago. Things change in 30 years… namely that he is at the helm of a multibillion dollar international company… Hacking the ATT phone is a bad business move. America isn’t ready for an unlocked phone.
Consumer - “Well, what does it work on?”
Apple Store Guy - “Tmobile, ATT, any GSM compatible Prepaid service”
Consumer - “So… What does it work on?”
People in the asian market have been using unlocked phones for a long time. We’re (Americans in general) aren’t ready. Plus, apple wants to make sure that for the most part, they get what they want (i.e. Unlimited data plans)
September 24th, 2007 at 10:27 pm
30 years later and he’s still wearing the same damn shirt.
September 24th, 2007 at 10:56 pm
In re: to Levi’s comment, I don’t think Apple is using the “unlock” avenue for growth necessarily, they just aren’t actively working against that outside of ensuring they keep to the letter of their contract with AT&T. At the end of the day, people that unlock their phone, or game console, or whatever are always the minority of users.
–
Dustin Puryear
Author, “Best Practices for Managing Linux and UNIX Servers”
http://www.puryear-it.com/pubs/linux-unix-best-practices
September 24th, 2007 at 11:09 pm
Yeah, this is true Geek
September 24th, 2007 at 11:18 pm
Perhaps it’s time we push through a consumer fairness law on cell phone network interoperability? Oh, but first we’d have to fix the quagmire in Washington…
September 24th, 2007 at 11:33 pm
why would he be against people hacking the Iphone? He doesnt care that who uses it as long as they buy his product. They want to dominate the world, they cant do so by being selective on the type of provider they use…
September 24th, 2007 at 11:50 pm
Bobby: Apple is famous for routinely marking up their products at least 40%, vastly more so than other hardware companies.
September 25th, 2007 at 12:17 am
@Daniel
First the markup is just speculation. But more importantly those guessed at markup numbers don’t take into account R&D and software. Dell spends virtually no money on software R&D (except for drivers). Apple makes it’s own OS. Other smart phones out there simply license existing OSs, not much effort there (by comparison).
While Apple makes beautiful hardware and obviously spends quite a bit on industrial design, a majority of their resources are going to software development. That is what people overlook.
It is one thing to develop a phone that is mildly appealing and install Windows mobile on it. It is a vastly different project to build a new concept in phones, re-engineering parts of the network it uses and developing a whole new OS and accompanying software.
It extremely disingenuous to look and the cost of the parts and whine about the “markup”.
September 25th, 2007 at 1:11 am
@ Levi^^^
you say it as though they clearly were going to have it on every carrier, then yanked it away at the last minute. It is the norm to launch to one phone service carrier, or maybe a few, but certainly not unlocked phones. Its extremely difficult to get an unlocked phone, anywhere, regardless of who made it. So of course Apple set up a deal with a carrier….its what you’re suppossed to do. however, they knew that people were going to hack the phone (the DRM thing teaches us that everything gets hacked….eventually), so they made a deal with the phone company that means they actually get MORE money on every phone that isnt hacked…..but they still get paid for all the hacked phones. The other phone companies get the same results when people buy their hacked phones, they just werent smart enough to set up a deal quite as slick as the one Apple set up with AT&T.
so of course apple doesnt care….cause they still sell the hardware. they get more with AT&T subscriptions though!
September 25th, 2007 at 1:34 am
It’s only in America that mobile phones are locked to a particular carrier and you have to demonstrate a reason to unlock the phone (going overseas, etc). It’s stupid and unnecessary.
September 25th, 2007 at 5:58 am
Your basic premise, “The revenue generated from AT&T subscriptions won’t be a significant amount compared to the revenue from hardware sales.” May, in fact, not be true. The phone itself only costs about $400, but the true cost for the iPhone for just the first year according to the math is near $2000.
You’ll need the details of the revenue sharing agreement before the central point in your article will hold any water. Until then, we must assume that Apple works in Apple’s best interest and currently they are working against the iPhone unlocking, therefore we must assume that Apple stands to lose a significant enough amount of revenue to 3rd party service providers due to unlocked phones.
January 30th, 2008 at 8:29 am
I’m confused, does unlocking the IPhone just alow you to switch carriers from ATT to say TMobile? or does it allow you to use all features of the IPhone with out paying for the servise?
April 21st, 2008 at 7:17 pm
nope just cus his one of the co-founders of apple cp that doesnt make him a geek
August 17th, 2009 at 7:58 pm
Ah c’mon Jobbs is a visionary. I don’t believe he does anything for the money alone. When you start doing that you lose the creative.
The fact that Jobbs and Gates have made or are making loads has nothing to do with what they started out to do.
Its the market that have latched onto the genius of these guys not the original goal.
If you try to create something just for the money, you’re on to a disappointment.
Art, design,innovation and creating stuff requires foresight and genius.
Comfortable mediocrity never went anywhere. which is why there are so many who under the disguise of “designers”, “gurus”, “mentors” and the rest play on the ignorance of the uneducated.
August 23rd, 2009 at 9:23 pm
Personally if I am traveling for more than a week in a country i find it easier to just buy a local sim card to use whilst in the country, most places they are inexpensive and it saves on high costs.