Apple whacks the iPhone hacks - a lesson in mobile-market power

Apple’s decision to make good on its threat to disable hacked iPhone units with a software upgrade should leave little doubt as to who has the power in the company’s partnership with AT&T. (Hint: it's not based in Cupertino.)

 

The move is telling given that the iPhone is a smash hit, with one million sold in less than three months. Its popular features, which rivals are fast duplicating, mean that a big percentage of those who bought it likely would have done so no matter which wireless provider's network it worked with.

 

Ah, but there’s the rub. Until the hack came along, it worked with only one network – that of exclusive iPhone carrier AT&T, which obviously didn’t like having its exclusive status voided by a 17-year-old New Jersey kid and his hacker buddies.

 

Apple, as well as its customers and application developers, are all finding out the hard way that the mobile handset market is vastly different from the business of selling MP3 players, where Jobs makes the rules.

Mobile phone makers like Nokia, Motorola and now Apple may generate buzz with snazzy products, but the wireless providers like AT&T and Verizon still control where and when they get distributed.

 

Apple’s actions are especially telling given that the software hacks that allowed the device to be used on any carrier’s network were popular in Europe, where they were the only way of actually using the device right now since Apple isn't rolling out service there until later this year.

 

These were not like the pirated versions of Office that have cost Microsoft billions in China sales. These people bought and paid for their iPhones months before they could use them in their own countries to make a call, and wanted to use them so bad that they risked voiding their warranties to do so.

 

Apple’s message to these fervent buyers – sorry folks, but we’ve got to play by the carriers’ rules. This is not the Apple of a long-haired, sandal-wearing, maverick CEO who’s out to take on Big Brother. This is business.

 

For U.S. users, Apple’s threat and follow-through was more along the lines of, ‘hey, you want the security patches and the WiFi store? Then you better get ready to write a check to AT&T.’

 

One thing I can’t figure out is why anyone would download the hack, then download an update that Apple has said would disable it and the phone. No one who uses the phone to conduct their everyday business would do that.

 

I’ve got to believe these people saying their iPhones were hacked, then whacked, were developers and other techies who wanted to see whether Apple would actually follow through on its threat.

 Given that iPhones with unauthorized third-party apps were also reported to be put out to pasture, my guess is Apple was repeating a message that Jobs has been delivering for months: yes, cool features are cool, but more than anything, Apple wants to make sure the product works with AT&T’s network.