Wednesday, June 15, 2011

Unlocked GSM iPhone 4 Offered Online at a Stiff Price

Apple on Tuesday began selling a GSM version of the iPhone 4 that doesn't require a contract with AT&T, making the handset available for the first time to T-Mobile users or those who travel internationally, where GSM is more common. The phone is currently available only on Apple's online store.

The unlocked device cannot easily be used on Verizon Wireless, Sprint Nextel or other CDMA-based carriers, since that requires a different chipset. Hacking the phone to use those networks, known as jailbreaking, voids Apple's warranty.

Steep Price

Without a subsidy from AT&T -- worthwhile for the carrier since voice and data Relevant Products/Services plans more than recoup the difference -- the unlocked iPhone, available in black or white, costs $649 for the 16-gigabyte version and $749 for the 32GB version.

That's more than the cost of buying the subsidized phone at $199, jailbreaking it (if you're able) and paying AT&T's $325 termination fee to switch to another carrier, something the majority of customers won't do.

But the high cost may be worthwhile to some users, said Michael Gartenberg of Gartner Relevant Products/Services Research.

"While most consumers are going to be best served by just buying a subsidized phone, there are cases where this makes sense. For example, users who travel overseas and want to use local SIMs for cheaper costs, or, in the U.S., T-Mobile customers who want an iPhone and are willing to put up with using it at much slower speeds on EDGE as opposed to 3G."

The iPhone isn't compatible with T-Mobile's standard data network Relevant Products/Services. And switching from AT&T to T-Mobile could be irrelevant if regulators approve a merger that would make the combined company the nation's largest wireless provider.

Not for the Mass Market

"For the most part, it's not a mass-market product; it's not even clear that Apple will sell this in their retail stores -- but for consumers who do need it, they will appreciate the availability," said Gartenberg.

Rumors of an unlocked iPhone, which has been offered in the past for older models, began with a tweet Monday from Chronic Wire, a self-described tech enthusiast, that "Unlocked iPhones headed to Apple Stores for Wednesday: MC603 (16GB, Black) MC604 (16GB, White) MC605 (32GB, Black) MC606 (32GB, White)."

The report was met with skepticism in the tech media and among analysts, who noted that Apple prefers to control the user environment by dealing with select carriers rather than have the iPhone perform differently on various networks (although the performance of iPhone on AT&T has been less than stellar).

There's no indication whether Apple will release an unlocked CDMA iPhone or a version that can switch between networks. The CDMA iPhone for Verizon began shipping in February. Apple didn't respond to our requests for comment.

The iPhone 5 is expected to be available this fall.

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