The Wall Street Journal reports that hackers have made their way into the Apple (AAPL) iPhone and done some work to get certain features to work without an AT&T (T) activation. The most important hack seems to be one that allows the browser and iTune features to work on WiFi without the AT&T cellular features turned on.
But, a hacker’s work is never done. Soon enough, they will have the iPhone working on other networks, perhaps T-Mobile’s, and probably overseas systems like Vodafone (VOD). The tech monkeys will also likely get the phone to make VoIP calls through WiFi hot spots.
None of this is likely to hurt AT&T. Customers in the US are paying their money. They like the iPhone. And, there is not much of a tradition of rewiring electronic devices here. Only ripping CDs and DVDs.
But, Asia is a different story, especially China. Changing products made in the West so that they can operate more inexpensively is not so foreign a concept there. IP does not carry quite so high an honor. Companies like Microsoft (MSFT) and the movie studios have figured that out.
The Apple process for making money on its iPhone is to get consumers to pay for it. No discounts. No giveaways to get new cellular customers to sign up for expensive plans. That may work in the US and it may work in Europe. But, in some parts of Asia, the iPhone will end up doing things that will hurt its value to carriers. Free VoIP calls are hard to make money on.
Douglas A. McIntyre can be reached at [email protected].
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