Phones
Unlocked iPhones Putting Gadget Activation Company Out of Business
Posted by Matt Buchanan at 8:33 AM on May 7, 2008
Hey, you there, with the unlocked iPhone. I bet you're feeling pretty good about it, satisfied you're totally getting over on the Death Star. But have you ever thought about the little(r) guy, the outside contractors doing the flooring, you might be screwing over? Cause you are. Synchronoss makes the activation magic happen for the iPhone, as well as a lot of other gadgets. But the millions of unlocked iPhones floating around—a trend they expect to get worse—is costing them a quarter of their revenue, nearly US$30 million. That bit of news today nuked their stock value by 44 percent, meaning you guys are basically killing the company. Do you feel so righteous now? Oh, okay. [Alley Insider]
Tags: apple | at&t | gadgets | iphone | mobile phones | phones | sync

Comments (AU Comments · US Comments)
There are currently no AU comments for this post.
xcharliemx
Posted 9:06 AM 7/5/08
What if I wanted to spoon with my iPhone naked? Is there a rule against that???
Maybe I'll make a snuff film with my iPhone.
xcharliemx
ThePeacemaker02
Posted 9:05 AM 7/5/08
Why don't they just sell them officially unlocked or something? I guarantee they would sell a shitton of them.
ThePeacemaker02
Aleung
Posted 9:02 AM 7/5/08
A company provides a unwanted service should go out of business yesterday. Why takes so long!?
Aleung
HeartBurnKid
Posted 9:01 AM 7/5/08
Somebody call the Waambulance.
HeartBurnKid
zimstyles
Posted 9:00 AM 7/5/08
well then do not sell me a 500dollar device thats locked. You try and abuse my rights thats what happens. Look at Europe none of the phones there are forcibly locked, you always have the option to buy an unlocked phone...
zimstyles
tehronin
Posted 8:58 AM 7/5/08
named*
tehronin
tehronin
Posted 8:58 AM 7/5/08
Thery aren't "killing the company", for them to do that they would have to activate iPhones and iPhones alone, now putting all of your eggs in one activation basket like that would be retarded and I doubt that is so. Now every unlocked iPhone is a missed opportunity, agreed, however carrier options are a must against the tyrannical despot CEO names Steve Jobs.
tehronin
YoMommaIsMyMomma
Posted 8:56 AM 7/5/08
ATT isn't going out of business, infact s is growing faster than some other wireless companies.
YoMommaIsMyMomma
martini1179
Posted 8:55 AM 7/5/08
Ok let me see if this makes any sense. I buy an iPhone, which makes the the owner of the device, which in turn grants me the ability to use it how I see fit. I unlock it and activate it myself on a different carrier. And so I end up hurting two CORPORATIONS in the process (Synchronoss AND AT&T). BONUS!
martini1179
MrSatan
Posted 8:53 AM 7/5/08
I personally don't care, especially since all devices should never have been locked anyways. I am not to sad about a company going out of business that shouldn't even have been there at all.
MrSatan
craig_16
Posted 8:52 AM 7/5/08
Gizmodo post numerous exploding death star articles as the Phone becomes more and more unlocked, and now you want us to feel guilty? As I said to the teddy bear maker, get stuffed.
craig_16
surfer88
Posted 8:52 AM 7/5/08
I find it funny that a post of this nature would even find its way on to Giz's pages considering all the coverage you guys and gals give a new unlocking procedure each time the iPhone firmware is updated.
Remember, when you're pointing your finger at someone, you have three fingers pointing back at you.
surfer88
spectator101
Posted 8:52 AM 7/5/08
Well, maybe they will think twice about locking a device. Should never have done it in the first place. That will teach them. Serves them right. Bye-bye and good riddens to bad rubbish.
spectator101
dgelwin
Posted 8:49 AM 7/5/08
Let me Check, um using something i paid for(bought with my own money NOT rented) with any network I choose, yup im okay, sorry but im not gonna lose any sleep over this.
dgelwin
Pepper
Posted 8:47 AM 7/5/08
eh... they knew it was going to happen. iPhones are useless without jailbreak...
Pepper
athingunique
Posted 8:41 AM 7/5/08
Jeez! You guys are all jerks.
athingunique
mycroft2000
Posted 9:25 AM 7/5/08
@surfer88: There seems to be some sort of correlation on this blog between being an early commenter on a post and having difficulty detecting the subtler nuances of the English language. I'm looking at you, Irony -- don't be shy!
mycroft2000
daylus
Posted 9:25 AM 7/5/08
Guess that's what happens when your business model is based on ripping people off... Who actually believes that they should still have to pay for "activation"?
daylus
ACoBildo
Posted 9:19 AM 7/5/08
I'm sorry, I wasn't aware that all companies must have my money.
ACoBildo
kanenas
Posted 9:15 AM 7/5/08
the value of their stock reflects the effectiveness of their activation system. Or the stream(or lack of) of future income (iPhone 2...)Actually, it should have plumped earlier...
Had they made it more robust ( hiring a few better programmers) they would spend a little to save a lot.
Or, if there is no way to secure the activation process, then they were overcharging AT&T for their services, or their stock was overvalued to begin with.
PS: I am not judging their or jailbreaker/unlocker's actions. I am just commenting on the economics response to them.
kanenas
BigDaddyM
Posted 9:10 AM 7/5/08
The unlocked phones are not making people lose jobs.
Those people simply would not use AT&T and the iPhone the way it is now.
There would simply be less iPhones in circulation.
Sure there would be a few that made the switch, but the key word is "few".
M
BigDaddyM
tkatz
Posted 9:58 AM 7/5/08
I'm going to be as straightforward as possible: I don't give a FUCK!
*Takes deep breath and prepares for rant*
First of all, the iPhone shouldn't require activation, nor should it even be locked to a carrier in the first place. But even though it IS locked, why require flimsy activation? Apple would have led a revolution by having an "open phone" and they blew it.
Secondly, Apple couldn't make an activation system of their own? They had to license this technology from somewhere else? Fuck you and your activation... Again.
Third of all, the iPhone is a piece of shit phone. I'll be the first Apple fanboy to say it (I guess it doesn't quite make me a fanboy anymore though). I don't find its call quality spectacular, and while it is revolutionary with its touch screen, getting to my phonebook takes more than 1 button press. It does make a good iPod though, and a killer mobile web browser. Go Blackberry, you'll get a much better phone.
I feel better. Thanks.
tkatz
HeartBurnKid
Posted 9:57 AM 7/5/08
@ThePeacemaker02: Because Apple's greedy, and they get a kickback from each and every AT&T contract. Reportedly, 75% of their income from each iPhone is from the contract, not the sale itself.
So there's the thing. Apple may sell more iPhones if they're unlocked, but they'd have to sell 4x as many in order to make it worth their while.
HeartBurnKid
bookmark
Posted 9:53 AM 7/5/08
Mobile phones shouldn't be locked anyway.
bookmark
Kareem King
Posted 9:46 AM 7/5/08
Maybe they should just go into business unlocking phone on the side.
Kareem King
daylus
Posted 9:44 AM 7/5/08
It's like feeling bad because you also hacked your phone to accept custom ring-tones. The ring-tone market is completely artificial, and is just another way for wireless providers to leverage their control to squeeze you for more money.
daylus
VulnoX
Posted 9:42 AM 7/5/08
For those of you that unlocked it, are you using it with Tmobile? How much are you paying for decent level of service options (Like, 500 minutes, unlimited text, unlimited web).
I have a HTC Mogul (Sprint Mogul, whatever) on Sprint. I am getting 500 minutes, unlimited data, unlimited text, unlimited sprint to sprint, roaming, phone insurance, and whatever I am forgetting, for about $32 a month.
If they do release an iPhone "2" with 3G and Tmobile gets their 3G network in gear out where I am (near Detroit, MI), I might be onboard.
I know I wont be able to get service for what I am paying with Sprint, but for those of you with maybe similar options to what I have, what are you paying?
Much thanks
VulnoX
allenjnl
Posted 9:29 AM 7/5/08
Device owners aren't responsible for some service company's survival, I could buy ten iPhones, unlock them and use them for doorstops if I want. See, when I BUY something, I then OWN it. F*ck Synchronoss if they have a faulty premise propping up their stock value. Not my problem, totally guilt free.
allenjnl
VirreVojj
Posted 12:01 PM 7/5/08
@bobmarley101: You're just jealous because you got a crappy iPod Touch isntead of an awesome iPhone. :D
VirreVojj
redrabbit
Posted 11:59 AM 7/5/08
Hmm, I guess Apple customers aren't as loyal as they claim...
redrabbit
matto
Posted 11:03 AM 7/5/08
@newgalactic: Taking your rationale to the logical extreme, I assume you avoid purchasing anything, and steal it instead? Because thats where your argument ends up.
I don't care about Apple's profit model. I care about honoring agreements I make. If they are not beneficial to me, I don't enter into them.
matto
matto
Posted 11:01 AM 7/5/08
@daversW: I urge you to run your own cost-free wireless phone carrier. And best wishes that it will not be 'retarted'.
matto
newgalactic
Posted 10:53 AM 7/5/08
@matto: I'm equally confused why a consumer would pay attention to and make purchasing decisions based upon a company's profit model. Seriously, it seems like your taking Apple's interests as your own. As a consumer, I'm only concerned with what my dollars will buy me, whether real or potential cost/benefits. I'm not concerned in the least with how Apple "intends" to make a profit. It doesn't concern me in a micro-economic sense whether their intended profit margin is achieved.
newgalactic
daversW
Posted 10:53 AM 7/5/08
yea well charing 35 bucks or whatever they do to activate a phone is retarted anyway. if i can do it for free by myself why wouldnt i? i have no simpathy for a company that charges 35 bucks for press a couple of buttons
daversW
newgalactic
Posted 10:47 AM 7/5/08
I'll shed the same amount of tears as I did for the buggy whip manufacturers. Sorry, but change is and should be the way of American business.
newgalactic
bobmarley101
Posted 10:35 AM 7/5/08
@liku: Let's say you buy and iPhone for $400 or whatever. If (hypothetically) it costs $410 for Apple to actually produce the phone but Apple gets $20 from AT&T, Apple would clearly prefer that you bought the Samsung rather than unlocking.
Obviously that's not the way things really are, but the idea is the same.
bobmarley101
liku
Posted 10:25 AM 7/5/08
@kenenas "the value of their stock reflects the effectiveness of their activation system." <-- says it all.
I would only add this; if they wanted to lock it, they could, but I would never have bought one. Someone got a lot of my money when I bought it, and that reflected its value to me. That value was based on may ability to unlock it. If it didn't go to the right place, there isn't a lot I can do about it.
You buy into the wrong dilemma. At lest for me, its not between activated and unactivated iphones, its between unactivated iphone and samsung.
liku
matto
Posted 10:19 AM 7/5/08
It amuses me that you douches can act so self-righteous about buying something where in the terms of the sale you agree (in bad faith) to an activation.
The sale price of the iphone was set by Apple by factoring in the business deal and revenue sharing they do with at&t. While it is not as direct a provider subsidy as most phones at a retail outlet are, the price they offer the phone at includes a term of service.
If you don't want to activate with at&t, then don't buy it. You can certainly get pompous and self-righteous about that. But pretending that you have the GOD GIVEN RIGHT not to activate your iphone with at&t just makes you look ignorant.
matto
bobmarley101
Posted 10:15 AM 7/5/08
@tkatz: As to your "Third of all," That's why I got an ipod touch. Good iPod/web browser, and don't have to worry about the rest.
Everyone else: I know this has been said a million times, but if you don't like something, don't buy it. You have no inherent "right" to non-crappy phones, or to unlock a locked phone and go to a different network. If it weren't for the Apple/AT&T deal there wouldn't be an iPhone at all, and if carriers had to give service away for free or whatever crap you want there wouldn't be carriers at all.
Ok, that's all.
bobmarley101
Bokusatsu_Tenshi
Posted 12:29 PM 7/5/08
Despite not having (and not wanting) and iPhone... well, why would I feel bad about cleaning my desk or taking the garbage out?
Sorry locking company, but blame it on Apple. They shouldn't have hired your services in the first place.
Bokusatsu_Tenshi
faslane
Posted 12:28 PM 7/5/08
@ Redrabbit: As far as Apple's loyal customers....we bought the phone didn't we??? Look at their profits over the last decade, then get back to us..
Not starting a flame war here, I'm just saying...Apple has PLENTY of My Money, my jailbroken phone should be a perk for all the dough I've given them over the last 20 years!
Faslane
Bought it? Pwn It! My Motto.
It's mine to do as I see fit, I have the receipt, it's a purchase not a lease!
faslane
Noobs-R-Us
Posted 12:26 PM 7/5/08
Wait, you want me to feel sorry for a company whose job it is to screw another company out of THEIR revenues?
Is that irony?
Noobs-R-Us
faslane
Posted 12:25 PM 7/5/08
hmmm....my moolah, my carrier choice, and my monthly bill, I don't feel bad, sorry!!!! Should have been an open source to begin with...not all locked up for the greedy corporations to nickel and dime you to death over, there's enough of that now with gas, oil, food etc. and it's only getting worse, sorry...I don't feel bad one I-oda (spelling?)
Faslane
And they (Synchronoss) should have known that someone sooner or later would figure it out and unlock it, I'm sure the millions they made already rests them nicely at night. Seriously! Not EVERYONE has a Jail broken iPhone, and when the 3G comes out they make millions more again, until that is jail broken. I doubt they're "hurting"
faslane
Stacky Botrus
Posted 12:25 PM 7/5/08
@surfer88:
Shut up.
Stacky Botrus
lecti
Posted 12:23 PM 7/5/08
Well, you don't commit crime to keep the prison industry in business...
lecti
kibogoyo
Posted 12:35 PM 7/5/08
heard of the invisible hand? Stop whining, synchronoss!
kibogoyo
diehippiedie
Posted 12:59 PM 7/5/08
@matto: lol "...honoring agreements I make.' what a broad statement, I'm sure there are exceptions yes? Not saying your statement is wrong, just kinda lost touch with reality. I don't know who's being self righteous here...
I don't care if it says on the cereal box "Must use 2% Milk purchased from Safeway", if I'm hungry for cereal, I'll get them. That agreement has not merit and its based sorely on corporate profit, which means it's not on the list of agreements i most honor. I have my rights to choose what kinda milk/liquid I soak my cereal in, if I feel like eating it with white russian this morning, they have no right to stop me doing so. (Just making a point, i dont actually eat cereal in white russian...)
diehippiedie
Boots_Mcoy
Posted 1:34 PM 7/5/08
oh my god.. what was i thinking? i should have thought twice ..i feel bad.. i feel so...(Burp!) never mind, it was just gas.
Boots_Mcoy
speakafreaka
Posted 1:26 PM 7/5/08
@BigDaddyM:
agreed.. out of all the ones in circulation that had been unlocked, im willing to bet that that a fair chunk of those are outside the US where they wouldnt have activated it anyway
speakafreaka
Tex1961
Posted 2:02 PM 7/5/08
tkatz - rant on!!
Tex1961
MR OPTIMUS PRIME
Posted 2:34 PM 7/5/08
I've jailbroken over 50 phones here in Baghdad Iraq alone because people cant use them without getting raped. Ill never understand the economics of making the neatest device EVER, then locking it down, and not supplying basic applications.
MR OPTIMUS PRIME
MR OPTIMUS PRIME
Posted 2:29 PM 7/5/08
Waa. Maybe Apple should have put basic applications like all other phones come with. Maybe they shouldnt have locked it to one company especially since they arent even a carrier.
MR OPTIMUS PRIME
geowrian
Posted 3:13 PM 7/5/08
@matto: It's not about a "GOD GIVEN RIGHT". It's about a company trying to control what you do AFTER you buy the product. By law, they can't require that you signup in order to purchase the phone (stores can choose not to sell it to you if they want, but even that's in murky legal water right now). They can offer a discount for doing so, but cannot require it. By purchasing the phone itself, you are not legally bound to activate it (all this is assuming you live in the USA). That's why even the courts have ruled that it is legal for you to jailbreak the iphone to use other carriers (but the distribution of tools to do so is against the law).
Anyway, long story short is that you DO have the legal right to use another carrier with the iphone and they can't enforce any form of agreement that makes it seem otherwise.
geowrian
redkamel
Posted 3:38 PM 7/5/08
geowrian+1
I dont even get what this company does. They activate phones for AT&T? what does that even mean? dont you activate a phone just by assigning it a code the network recognizes? All that should require is adding a number to a list. They dont even have a purpose in the first place.
redkamel
mikemacman
Posted 4:03 PM 7/5/08
I feel great because I don't have to use AT&T.
mikemacman
matto
Posted 5:00 PM 7/5/08
@graffiksguru: Then they'd be bitching and moaning about the Big Evil Corporation charging them $700 for a phone.
matto
HoseHead
Posted 4:56 PM 7/5/08
irony and sarcasm are obviously lost on this lot.
HoseHead
graffiksguru
Posted 4:33 PM 7/5/08
@geowrian: Agreed, but I can kindo of see matto's point. Say the iphone cost $700 to make, but they sell them for $399 because they are thinking you are going to buy a wireless plan from at&t, of which they get a certain percentage of money for 2 years. Then they get screwed because you just take it over to T-mobile.
Would you rather Apple just sell it unlocked for $700 and you pick the carrier? I kind of like the subsidized price. (by the way I have no idea how much it cost to make the iphone, it could be $50 for all I know)
graffiksguru
The Full English Please!!
Posted 7:27 PM 7/5/08
Iphones sales will drop if the activation process is taking away...
Dont think many people would sit down and actually committ to the contract, when they can just buy without commiting to anything befor activating
The Full English Please!!
OMG! Ponies!
Posted 9:31 PM 7/5/08
@faslane: I did look at the company performance over the past decade. Funny how its stock price pretty much tracks the iPod.
Fair disclosure, I'm still sitting on stock bought after the Sept. 00 crash.
OMG! Ponies!
OMG! Ponies!
Posted 9:26 PM 7/5/08
@surfer88: Yeah, but when you slap someone across the face, you have no fingers pointing back at you. Knee to the groin and full-on head butt also result in no fingers pointing back at you.
OMG! Ponies!
bms
Posted 11:08 PM 7/5/08
That is why phones and service provides should be separate.
bms
MariaOzawa
Posted 11:53 PM 7/5/08
the union plumbers knew what they were getting into when they signed on to work on the death star....
MariaOzawa
djtumbleweed
Posted 8:59 AM 7/5/08
Anyone who can loose 30 Million dollars in revenue and still have something to show for it afterwards is most definitely NOT a "little guy".
I'll also agree that the phone should have never been locked down so tightly in the first place. Regardless of weather it "fits the Apple mold". People who buy a hand-held computer ought to be able to do with it as they please.
Psst, hey Steve, Lets keep things open source in the first place and show the world the creative talent that lies in waiting.
djtumbleweed
oper451
Posted 1:47 AM 8/5/08
Single Tear Running Down my Cheak.... and the world still goes round
oper451
Raz
Posted 2:31 AM 8/5/08
you know, arguably it's two sided here. I don't know about the US (but i've heard loads about at&t) but here in the UK they took it out against TMobile. Great, but i'm in the middle of a vodafone contract, and don't intend to a) cancel and switch, nor b) have 2 contracts.
so here's the crutch. I don't know what the cost from apple to the providers is, but had they asked for less cash, and approached more if not all the major providers, then you could buy the phone against whoever you were already contracted with, and a lot less people would be interested in jailbreaking the phone. that's got to be better than fixing to one company who not everyone is connected to?
just my 2 cents
Raz
Sean Robertson
Posted 2:27 AM 8/5/08
@redrabbit: I for one refuse to be loyal to AT&T. I like Apple's devices but AT&T has done nothing to deserve my business and everything not to.
Sean Robertson
shawn_dude
Posted 2:24 AM 8/5/08
Hey! All you people driving cars! You're putting the buggy-whip manufacturers out of business! You should be ashamed of yourself.
shawn_dude
Raz
Posted 2:19 AM 8/5/08
@diehippiedie: mmmm cornflakes and white russian.... bring on a slow and painless death...
Raz
HeartBurnKid
Posted 3:35 AM 8/5/08
@matto: I have the GOD GIVEN RIGHT to do whatever I want with my hardware after I buy it. Last I checked, Apple doesn't show a license agreement before they take your credit card info (hell, maybe they do now, I don't know, I haven't actually bought an iPhone yet), so any "implied" agreement they might have by virtue of taking your money isn't worth the paper it isn't written on.
HeartBurnKid
spaceman37
Posted 3:34 AM 8/5/08
I was waiting for a Clerks reference, but I'm not feeling witty enough to come up with one.
spaceman37
HeartBurnKid
Posted 3:29 AM 8/5/08
@graffiksguru: They could do what every other cell phone manufacturer on the planet does, and sell the same model locked and unlocked.
HeartBurnKid
jollygoodlad
Posted 6:38 AM 8/5/08
If a quarter of this little guy's profit loss equals $30 mil, then they're still realizing $90 mil in profits, right? Man, I wanna be a little guy too!
jollygoodlad
CELLRATER
Posted 6:59 AM 8/5/08
If you take into consideration that I would NEVER buy an iphone if it meant being in a 2 year contract with at&t the company has not lost anything.
The options are:
1. I unlock it myself and they dont get paid.
2. I dont buy an iphone at all and they dont get paid.
I dont see the problem here.
CELLRATER
JaXs
Posted 10:43 AM 9/5/08
I am all for costing the telecoms money. Keep up the good work.
JaXs
geowrian
Posted 7:12 PM 9/5/08
@graffiksguru: Using your example, the $700 price tag is an acceptable solution. Just offer a $300 discount or whatever for signing it up with AT&T for 2 years. It still offers a major incentive to get AT&T, but also gives the other people an option. Everybody makes out based on sales (and I think it would sell even more using this business model). Right now they're basing the model on an assumed AT&T signup, which many times is a faulty premise.
@HeartBurnKid: Agreed...sorta. Legally, when you BUY something, you own it and can do whatever you want with it (barring anything illegal). If you purchase a LICENSE, then you are bound to the licensing terms. Courts have recently been favoring the idea that if it even appears to be a sale of the item, then you are buying it, not licensing it. For something like the iPhone, it's definitely appears to be a sale. I have an iPod touch which its pretty much the same as the iPhone but without the phone and some other minor things. I know for a fact that it was sold, not licensed (plus I never agreed to any EULA upon purchase). I asked a coworker that has an iPhone and it was the same way for him.
One last thing I'd like to note that if it was part of any licensing agreement, then it would be a violation of the license agreement to sell or resell the phone to anybody else without Apple's consent and/or the buyer agreeing to the EULA before sale. If it was bought, then you would be allowed to sell your item without any of that.
geowrian