By Michelle Kessler, USA TODAY
Apple (AAPL) is battling some customers for control over how iPhones are sold and configured.
The electronics maker is no longer selling iPhones for cash in its stores. It now only accepts credit or debit cards.
It's the latest example of Apple keeping a tight rein on the iPhone, says tech analyst Chris Hazelton at researcher IDC. Apple closely manages many aspects of the popular phone, including carriers it works with and what programs it runs.
The credit-only policy announced last week is designed to discourage people from buying iPhones in hopes of quickly reselling them for profit, Apple spokeswoman Natalie Kerris says. Credit sales may make it easier for Apple to track bulk buyers.
Resellers are doing brisk business on eBay, where about 1,000 iPhones are often up for auction. Prices vary but are often higher than the $399 Apple charges.
Apple controls iPhone usage by warning that altering the phone usually violates its warranty. Even so, owners are overriding restrictions by:
•Using a cell carrier other than AT&T (T). An iPhone is designed to work only with AT&T's network in the USA. Customers can change that by downloading widely available software from the Web to an iPhone via Wi-Fi.
Modified iPhones can usually connect to any carrier using the same underlying technology as AT&T's, including T-Mobile and many international carriers.
Apple this month estimated that about 250,000 iPhones have been "unlocked" in this way, even though some features may not work. That might cause Apple to lose money, because the company is widely believed to have a revenue-sharing deal with AT&T. The companies have not released details.
Hazelton says some modified phones are probably being used in other countries, where the iPhone has not yet been released. (It will go on sale in the United Kingdom, France and Germany this month.)
•Adding unapproved software. An iPhone is essentially a computer, but Apple makes it tough to add outside programs. That should change this spring, when Apple releases new developer tools.
But some customers aren't willing to wait. They're using a software override to download whatever they want. Several recent eBay auctions for unlocked phones also featured "bonus" add-on software, including video games and instant-messaging programs.
"There's a pull from consumers," says equity analyst Ashok Kumar at CRT Capital Holdings. IPhones with fewer restrictions "are much more appealing," he says.
Andres Sanchez, a digital media designer in Orlando, modified his iPhone because he wanted to play games on it. He later switched to T-Mobile cellphone service because he prefers it to AT&T.
Apple (AAPL) is battling some customers for control over how iPhones are sold and configured.
The electronics maker is no longer selling iPhones for cash in its stores. It now only accepts credit or debit cards.
It's the latest example of Apple keeping a tight rein on the iPhone, says tech analyst Chris Hazelton at researcher IDC. Apple closely manages many aspects of the popular phone, including carriers it works with and what programs it runs.
The credit-only policy announced last week is designed to discourage people from buying iPhones in hopes of quickly reselling them for profit, Apple spokeswoman Natalie Kerris says. Credit sales may make it easier for Apple to track bulk buyers.
Resellers are doing brisk business on eBay, where about 1,000 iPhones are often up for auction. Prices vary but are often higher than the $399 Apple charges.
Apple controls iPhone usage by warning that altering the phone usually violates its warranty. Even so, owners are overriding restrictions by:
•Using a cell carrier other than AT&T (T). An iPhone is designed to work only with AT&T's network in the USA. Customers can change that by downloading widely available software from the Web to an iPhone via Wi-Fi.
Modified iPhones can usually connect to any carrier using the same underlying technology as AT&T's, including T-Mobile and many international carriers.
Apple this month estimated that about 250,000 iPhones have been "unlocked" in this way, even though some features may not work. That might cause Apple to lose money, because the company is widely believed to have a revenue-sharing deal with AT&T. The companies have not released details.
Hazelton says some modified phones are probably being used in other countries, where the iPhone has not yet been released. (It will go on sale in the United Kingdom, France and Germany this month.)
•Adding unapproved software. An iPhone is essentially a computer, but Apple makes it tough to add outside programs. That should change this spring, when Apple releases new developer tools.
But some customers aren't willing to wait. They're using a software override to download whatever they want. Several recent eBay auctions for unlocked phones also featured "bonus" add-on software, including video games and instant-messaging programs.
"There's a pull from consumers," says equity analyst Ashok Kumar at CRT Capital Holdings. IPhones with fewer restrictions "are much more appealing," he says.
Andres Sanchez, a digital media designer in Orlando, modified his iPhone because he wanted to play games on it. He later switched to T-Mobile cellphone service because he prefers it to AT&T.
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