Four Patches Released By Real Network For Critical Bugs in Multimedia Player

RealNetworks has issued four critical patches for several versions of its RealPlayer running on Windows, Linux and Apple's Mac OS X.The flaws could allow a hacker to run malicious code on a PC or cause the computer to reveal information, according to an advisory from Secunia, a security vendor based in Denmark.

RealPlayer is an application that plays audio and video streamed over the Internet.

RealNetworks has published a table detailing which vulnerabilities affect certain player versions on the different platforms. Some users will need to download an entire new version of the application, while others may be able to just download patches.

One of the problems involves the handling of frames in SWF (Shockwave Flash) files due to a design error, which can cause a heap-based buffer overflow, Secunia said.

Another problem causes a stack-based buffer overflow when a media file is imported using an ActiveX control, Microsoft's technology that adds extra functionality to Web pages.

A third flaw is described by RealPlayer as allowing local resources to be accessed. The fourth also involves ActiveX, where a timing issue with "Controls", "Console", or "WindowName" properties can be maliciously manipulated to corrupt RealPlayer's memory, Secunia said.

Secunia ranked the flaws as "highly critical," the vendor's second-highest ranking of risk. The flaws were found by Peter Vreugdenhil, Elazar Broad, Dyon Balding of Secunia and another anonymous researcher, Secunia said.

Apple's iPhone 3G hits shelves; Extras Store also Opened

Apple's international launch of iPhone 3G began in New Zealand and Japan on Friday, as a freshly-opened ‘App Store’ tempted fans with independently created mini-programs for the coveted devices.

New Zealanders were the first to be able to buy the much-hyped iPhone 3G when three stores opened just after midnight, and Tokyo followed shortly afterward.

Sales of iPhone 3G models begin later in the day in 21 other countries.

On the eve of the iPhone 3G launch, Apple opened an App Store stocked with hip, fun or functional programs crafted by third-party developers.

The shop, accessible through Apple's online iTunes store, opened with more than 500 mini-programs, many of them free.

Mini-applications include games, photo-sharing and mobile versions of Twitter, Facebook, MySpace and eBay.

"Facebook is even cooler on the iPhone 3G, with the ability to discover friends nearby, or to effortlessly take pictures and upload them instantly to Facebook," said the social-networking website's founder Mark Zuckerberg.

Game makers are capitalising on touch-screen and motion-sensing technology in iPhones.

"The touch and tilt controls are natural and easy to learn, making gaming even more inviting, creative and rewarding," said Sega product development vice president David Cobb.

A version of the Japanese company's "Super Monkey Ball" tailored for iPhones is in the App Store.

"Apple's iPhone and iPod Touch open up the world of games to an entirely new audience," Cobb said.

Applications crafted for iPhones will also work on iPod Touch models, which are basically iPhones without the telephone capabilities.

Brian Greenstone, president of computer game maker Pangea Software, called the iPhone platform "truly ground-breaking."

Software creators are allowed to set their own prices, as long as figures end with 99 cents. Apple keeps 30 percent of sales prices to pay for operating the store.

Apple senior vice president of world-wide product marketing Philip Schiller said the iPhone "represents a new software platform for developers, combining the most advanced mobile operating system, sophisticated developer tools and a breakthrough way for developers to wirelessly sell and distribute their applications."

Apple released an iPhone kit to outside developers in March in an effort to make the hot devices even more popular and wrest market share from smart phone market powerhouse Blackberry.

The kit lets programmers customize programs for the touch-screen mobile devices combining telephone, video, music, and Internet connectivity.

Apple vets software creations before making them available exclusively at the App Store.

Apple will sell iPhone 3G models in the United States for 199 dollars and 299 dollars, depending on memory capacity. The original eight-gigabyte iPhone was priced at 600 dollars when it debuted in June last year.

IPhone 3G prices in some countries will be as low as one euro (1.57 dollars) provided customers purchase multi-year service plans that translate into lucrative long-term revenue streams for carriers.

Apple is continuing its strategy of locking iPhones exclusively to one telecom carrier per country.

Apple and numerous technology websites have posted online tips on how to navigate Friday's anticipated buying frenzy.

Auckland student Jonny Gladwell, 22, had been first in line outside the Auckland store since Tuesday after being dared by friends who promised to pay for his phone if he lasted the distance in the queue.

"I'm going to go home, put this on charge, have a play with it and have a nice big sleep," Gladwell told Television New Zealand after securing one of the first iPhones sold in the world

AT&T looking at charging heavy Internet users extra

AT&T Inc., the country's largest Internet provider, is considering charging extra for customers who download large amounts of data.
"A form of usage-based pricing for those customers who have abnormally high usage patterns is inevitable," spokesman Michael Coe said this week.

The top 5 percent of AT&T's DSL customers use 46 percent of the total bandwidth, Coe said. Overall bandwidth use on the network is surging, doubling every year and a half.

AT&T doesn't have any specific plans or fees to announce yet, Coe said.

Most cable companies have official or secret caps on the amount of data they allow subscribers to download every month. Time Warner Cable started a trial earlier this month in Beaumont, Texas, under which it will charge subscribers who go over their monthly bandwidth cap $1 per gigabyte.

Cable companies are at the forefront of usage-based pricing because neighbors share capacity on the local cable lines, and bandwidth hogs can slow down traffic for others. Phone companies have been less concerned about congestion because the phone lines they use to provide Internet service using DSL, or Digital Subscriber Line technology, aren't shared between neighbors, but AT&T is evidently concerned about congestion higher up in the network.

Those who mainly do Web surfing or e-mail use little data and have scant reason to pay attention to traffic caps. But those who download movies or TV, particularly in high definition, can hit the caps imposed by cable companies.

Download caps could put a crimp in the plans of services like Apple Inc.'s iTunes that use the Internet to deliver video. DVD-by-mail pioneer Netflix Inc. just launched a TV set-top box that receives an unlimited stream of Internet video to a TV set for as little as $8.99 per month.

MS Office for Mac Sales Soar, VBA Support To Return

Apple is selling more Macintosh computers than ever before -- and that's having unexpected benefits for Microsoft. Sales of Microsoft Office 2008 for Mac are triple the volume for the previous 2004 version of the productivity software and are the highest in the product's history, Microsoft announced Tuesday."The response has been amazing -- since we launched in January, the velocity of sales for Office 2008 is nearly three times what we saw after the launch of Office 2004," said Craig Eisler, general manager of the Mac business unit at Microsoft. The 2008 version launched at the MacWorld show this year.

"As we set our course for future versions, we are working closely with customers and will also expand our staff to ensure that Office for Mac remains the most powerful and compatible productivity suite for Mac customers," Eisler said.

SP1 Released

Microsoft also released Service Pack 1 for the Mac Office suite, featuring "suitewide updates for increased stability, increased security and overall performance improvements."

SP1 addresses compatibility issues between the Mac and Windows versions of Excel; improves Entourage support for Exchange Server, including the ability to remove attachments from Exchange messages and synchronizing to the server; and provides minor improvements for Word and PowerPoint.

Bloggers said the most notable addition in SP1 is support for Excel chart-formatting options that were available in previous versions of Office.

VBA Support To Return

Microsoft also said it will bring back Visual Basic for Applications support to the Mac in the next version of Office for Mac. A press release said Microsoft "recognizes that VBA language support is important to a select group of customers who rely on sharing macros across platforms." The prior version supported AppleScript and the Automator scripting tool.

The removal of VB was not due to any of the "conspiracy theories" floated around, such as that Microsoft was trying to "slowly kill the Mac" or drive users to Windows versions of the software, Erik Schwiebert, a software design lead in Microsoft's Mac business unit, wrote on his blog. The decision was driven by the technical difficulties of including VB for the latest version of Apple's operating system, he wrote.

While technical challenges remain, "for a while now I and several others have been working with a group of people who know a heck of a lot about the internals of VB," Schwiebert wrote, "and once we determined that we could achieve the revival of VB in the new schedule for the next version of Mac Office, we locked it into place on the feature list."

The high volume of sales for the current version indicates that a lack of VBA support isn't a big deal for most Mac users, Schwiebert said. As to when the next version will be released, the developer assured readers it will be less that four years.

Apple now sells HBO shows on iTunes store

Apple Inc. has scooped up Time Warner Inc.'s HBO to feed television shows to its online iTunes store, reeling in one of the last holdouts among major channels and agreeing to a rare pricing concession to land hit shows like "The Sopranos," "Sex and the City" and "The Wire."The Cupertino, California-based company said HBO programming began appearing on iTunes Tuesday and the shows cost either $1.99 or $2.99 per episode, making HBO the only channel allowed to charge above the standard $1.99 for their episodes on iTunes.

Eddy Cue, Apple's vice president of iTunes, said the higher prices for some of HBO's shows — in particular "Deadwood," "Rome" and "The Sopranos" — are still cheaper than buying the DVD sets of the full seasons of those shows, which translates into prices two or three times higher per episode.

"I don't think it's a shift in strategy — I view this as an extension of the strategy we've had," Cue said in an interview.

HBO is also trying out a service of its own that allows cable customers with HBO subscriptions and high-speed Internet connections to download shows and movies and play them on personal computers, but it's not widely available.

Apple splits the revenues from iTunes sales with content providers, with most of the money going back to the movie studios, television channels and record labels whose work is sold through the Web site.

That's made iTunes a favorite of independent musicians and other artists whose works wouldn't be distributed as broadly without the service, but has rankled some big-media companies because of Apple's tight control over the pricing.

In a high-profile rejection of Apple's pricing tactics, NBC Universal stopped offering TV shows on iTunes last fall after a spat over its inability to set different prices for certain shows. NBC then defected over to Microsoft Corp.'s camp, offering its TV shows on Microsoft's rival service, Zune Marketplace, where the network was given more flexibility over pricing.

Cue said NBC is the only major channel currently not offering its shows through iTunes. The store currently carries 800 different shows and has sold more than 150 million episodes.

The iTunes store isn't a big cash cow for Apple, making up less than 10 percent of Apple's $24 billion in sales last year, but is a big driver of iPod and Macintosh computer sales.

Apple Reportedly Agrees To Refunds In Mac-User Suit

Apple has reportedly agreed to give refunds of $25 to $79 in cash to as many as 2.3 million Mac users who bought replacement power adapters for the PowerBook and iBook, court documents revealed Friday.
The refund is part of Apple's proposed settlement of a class-action suit filed in 2006 over spark-prone adapters that shipped with the Mac computers. According to documents filed in U.S. District Court in San Jose, Calif., federal Judge James Ware gave preliminary approval March 24 to the agreement reached with plaintiffs, BloombergNews reported.

The suit claimed that Apple misrepresented problems with the adapters, the news agency said. The Mac maker recalled 570,000 of the devices, and offered replacements at no charge. A hearing on final approval of the deal is scheduled for Sept. 8, Bloomberg said.

The settlement was the second reported this week involving an Apple product. Apple Canada offered a total of $3.54 million (U.S.) in credits to Canadian iPod owners, in order to settle two lawsuits over the battery life of the portable music players.

The credits are being offered to owners of first-, second-, or third-generation iPods bought before June 24, 2004, The Gazette newspaper in Montreal reported. The lawsuits, one filed in Montreal and the other in Toronto, claimed that the rechargeable batteries in the devices died after three hours of use, while Apple advertised the iPods as running for eight hours between charges.

As many as 80,000 Canadians could be eligible for a credit, lawyer Philippe Trudel, who represented the plaintiff in the Montreal suit, told the newspaper. The credit of $44 (U.S.) per person would be usable at Apple's online store.

Apple has had to deal with other marketing-related lawsuits this year. In March, a class-action suit filed in federal court in San Jose, Calif., accused the company of deceptively marketing its 20-inch iMacs by grossly inflating the capabilities of the monitor. The plaintiffs claimed the monitors were inferior to previous generations of displays. The suit is pending.

iPhone moves a step closer to getting IM

A recent patent filing indicates that Apple is getting closer to adding its own instant messaging client to the iPhone.
he filing is titled "Portable Electronic Device for Instant Messaging," and covers methods for sending, receiving, and viewing ongoing conversations. The proposed GUI is similar to Apple's current interface for SMS.

Built-in support for IM has been missing from the iPhone, to the dismay of many users. The patent filing shows Apple has IM on its mind.

At the recent launch of the iPhone SDK, AOL demonstrated an AOL Instant Messenger client, but it isn't allowed to run in the background, which normal IM applications rely on.

Support for IM is quickly becoming a must on mobile phones. Users want the same thing on their mobile phone as they have on their computers including IM, according to Leif-Olof Wallin, research vice president at Gartner.

"It will be a blockbuster in two, three years," said Wallin.

But instant messaging is also a threat to the massive amounts mobile carriers make from SMS messaging, which the iPhone currently supports.

"They can charge much more for SMS compared to IM," said Wallin.

Pressure from its carrier partners is a possible explanation for why Apple has taken a hands-off approach to a feature many users want, according to Wallin.

"At the same time it can't afford to be left behind" he said.

Apple's iTunes Store Becomes No. 1 in Music Sales

With new online music retailers springing up to challenge its Net dominance, Apple's iTunes Store moved the goalposts again Thursday. It announced its store has overtaken even Wal-Mart as the number-one music retailer in the U.S. -- online or off.

The new designation is based on data during January and February from the NPD Group, a market-research firm. NPD's MusicWatch survey compiles unit purchases in a given week.

Physical CD Sales Drop

According to news reports, Apple now has 19 percent of the market and Wal-Mart, including both its online and brick-and-mortar sales, has 15 percent. Best Buy took third with 13 percent, and Amazon, which has launched a music store to compete with Apple, is fourth at six percent. Target, also with six percent, is fifth, followed by FYE/Coconuts, Borders, Barnes & Noble, Circuit City, and Rhapsody.

Apple's move to the top of both the real and virtual worlds of music retailing is a milestone not only for the Cupertino, Calif.-based company, but also for the industry. Physical CD sales have been plummeting as the industry tries to adjust to the new digital reality. In fact, NPD reports that nearly half of all teens in the U.S. didn't buy even one physical CD in 2007, up from 38 percent in 2006.

But it's not just the real-vs-virtual ratio that is radically changing the music industry. There was a 10 percent decline in overall music spending in 2007.

Michael Gartenberg, an analyst with industry research firm JupiterResearch, said the new position for the iTunes Store "demonstrates the remarkable shift that has taken place in the music industry." He noted that this shift not only means an increasing role for online distribution, but the "reinvention of the single."

Four Billion Songs

The new claim to fame for Apple's store comes as it faces new competition. Apple said its iTunes Store, which launched less than five years ago, has sold more than four billion songs, has 50 million customers, and has "the world's largest music catalog" with more than six million songs.

One potential new competitor launched Thursday as social-networking site MySpace joined with three of the four biggest music companies, Sony BMG, Universal Music Group and Warner Music, to create what MySpace described as a "fully integrated 360-degree global music solution."

In addition to music sales, there will socializing tools, ad-supported audio and video streaming, a mobile storefront, concert tickets, artist T-shirts, and integration with MySpace's millions of artist profile and user pages.

And recently Earth's biggest store -- Amazon -- got bigger, as it launched Amazon MP3, with music downloads free of digital-rights management and more than two million songs. Those downloads are generally priced lower than songs from the iTunes Store.

A new day for Macs in the enterprise?

When Apple CEO Steve Jobs announced that the iPhone was ready for enterprise use, the announcement caused a stir that few of the world's iconic businessmen could match. It seemed that everyone from rank-and-file worker-bees to CEOs wanted to get their corporate applications served up on the hot new device. Why? This was Apple -- a synonym for awe-inspiring design and coolness, the antithesis to stodgy old corporate technology that burns the eyes red and freezes computers blue.

But some Apple-watchers and evangelist IT practitioners who use Macs for business think the announcement runs deeper than the iPhone itself in its importance. Some believe it could usher in the era of a more enterprise-friendly Apple.

Such a paradigm shift, they argue, could serve as the final ingredient in the boiling cauldron being stirred by employees at the edge of organizations who have become dissatisfied with corporate technology and who have turned to innovative options in the consumer space to meet their needs.

Some tall hurdles related to converting an enterprise from PCs to Macs, of course, have been around for years. Many corporate IT departments find themselves beholden to decisions made by predecessors during the 1990s, when PCs and the Microsoft Windows operating system seized a chokehold on the corporate market. Companies planned everything from back-end servers to client software based on a Microsoft framework, notes Roger Kay, an analyst with EndPoint Technologies.

Integrating Mac equipment and other Apple products into such an environment requires time and money. "Despite the hairiness of Microsoft software, most companies crave compatibility with it," Kay says. "They have these existing investments that they want to get use of."

But a move to Web-based software, where users need nothing but a browser to access their applications, could alleviate the IT hang-up on integration.

Employees have been leading this movement. Instead of using the corporate-sanctioned software on their workstations, many have gravitated to technologies like wikis, blogs, and social networks to collaborate on projects horizontally, without IT's help or blessing. In the CIO Consumer Technology survey , the 311 IT decision makers surveyed conceded that nearly 25 percent of their employees use social networks for work purposes, while 21 percent utilize wikis and another 17 percent use blogs.

From a hardware perspective, Macs have increasingly become more people's brand of choice. Apple shipped 2.3 million Macs in the first quarter of 2008, which represented a 44 percent unit growth for the product and helped Apple realize 47 percent revenue growth compared to the same quarter the year before.

But businesses' adoption of Macs and Apple software has still been sluggish, perhaps, in part, due to this being a low priority for Apple.

While Apple of course deals with businesses, and has a business team at some of its stores, it undoubtedly remains a consumer-oriented company, by the numbers. Its iPod claims around 70 percent of the market share for MP3 players. Apple sold 22.1 million iPods in the first quarter of 2008. On average, the company says, an iPod has been sold every 1.7 seconds in the five-and-half-year life span of the product.

And evangelists who run Mac shops in SMBs say their experiences, not as dissimilar to those of large enterprises as you might believe, still demonstrate a mixed bag of results for those using Apple in the corporate setting.

The wholesale switch
Shani Magosky, chief operating officer (with IT responsibilities) of Jaffe Associates, a 25-person marketing and public relations firm, didn't need the iPhone to embrace Apple.

Magosky started looking into Macs for her traditionally PC and Windows-based company back in the fall of 2006, she says. She wasn't necessarily wooed by Bono singing in an iPod commercial. She was sick of PCs breaking all the time, she says. Then there was the "sticker shock" of learning what it would cost her to upgrade to Microsoft's SharePoint collaboration software (and the accompanying server technology).

Specifically, she'd been running an outdated version of Microsoft's terminal server, which allowed her employees (all of whom work remotely, as Jaffe has no central office) to connect to the network and share files. "It was unnecessarily slow and unreliable," she says. "We ended up spending a fortune on IT trouble-shooting."

With her terminal server being outdated, she was told the best option would be to upgrade to SharePoint, which, after purchasing and installing the server, buying the software licenses and all the support surrounding it, would have cost $100,000, Magosky says. "They nickel and dime you," she says.

Meanwhile, PCs became a costly problem. Between what Magosky views as poor manufacturing and tons of malware permeating the layer Windows leaves between the Web and the network, the PCs began to break with great frequency, she says. "There is just so much that can go wrong with them. All these viruses happen to PCs that don't happen to Macs. And then it costs you more to fix it than just buying a new one. So I said I wasn't going to waste anymore, and went out and bought a MacBook Pro."

Perhaps serendipitously, right around this time, her boss, President and CEO Jay Jaffe, was on vacation with his daughter in San Francisco and visited Apple's flagship store on Stockton Street. "He bought an iPod touch that he was infatuated with," says Magosky. "When he was there, he talked to the business team. They convinced him there was nothing we needed to do now that we couldn't do with them [Apple]."

Before long, Magosky set about switching her entire shop over to Macs. Since Jaffe Associates serves the legal industry, which makes wide use of Microsoft software, Jaffe began using Office 2008 for Macs. The company also chose Apple's Kerio software for e-mail, Entourage for archiving, and Apple's Xserve server for back-end storage of data. Magosky predicts that Jaffe will realize a savings of 50 percent in maintenance costs due to the Apple switch, which will pay for the hardware and implementation of Apple products in the first year, she says.

Third-party Mac support, by the hour, remains more costly than Windows support. But, Magosky says, her total amount of required support time has dropped so substantially that she's gaining that 50 percent in savings.

"It's going to increase the efficiency of our staff tremendously," she says. "On top of the hard dollar savings, it's going to free me up to do other, more value-added things." What about those cool iPhones? While Jaffe's users primarily use RIM BlackBerry devices for mobile needs, Magosky says that she might consider iPhones down the road, if enough users call for them.

Hurdles remain
Ditching PCs at a 25-person company is one thing. But introducing Apple to a large enterprise with legacy systems is quite another. Even some enterprises who've been managing mixed Mac and PC environments for years say that Apple still has some work to do.

Rob Israel, manager of desktop support at Digitas, a New York-based ad agency, says that 30 percent of his company runs Macs. Israel, who manages some 600 Macs across the enterprise, says that a hybrid environment of Macs and Windows can have its pitfalls, technologically and culturally.

"We barely deploy Apple servers here even though the culture has become Macintosh friendly," he says. "There is still a sense in the IT department that we are a Windows shop, and why bother complicating things by introducing more platforms."

The IT shop runs four Apple Xserves, one of which is used to host Filemaker Pro.

While Israel describes the company's relationship with Apple in terms of contracts as "great," the arrangement leaves some things to be desired, he says. "Apple does not provide technology roadmaps, which enterprise IT departments obviously need," he says. "What's worse, they make their hardware incompatible with the previous version of the operating system, and their schedule is impossible to keep up with."

For instance, Israel says Digitas can't deploy new versions of Leopard, Mac's operating system, as quickly as Apple demands. Every time Apple moves to the next version of an OS, Israel says, Digitas ends up having six months where they're forced to buy out-of-date equipment to stay compatible with the old OS. "We have complained about this for the last four years," he explains. "They [Apple] do not have any motivation to design their new hardware to support an old OS, so they won't."

Not quite a tipping point
Apple's buzz could hardly be louder. But have we now reached a time when many large enterprises can consider doing a rip and replace, swapping PCs for Macs? Not likely, says Kay.

Even if a progressive CIO who felt his or her company had sunk too much money into Windows wanted to switch wholesale, gaining the initial capital to get the job done, especially as the economy tightens, could be difficult, he says. "It's hard to see a time when you can change the paradigm that much for computing," Kay says.

For now, the iPhone might just be the starting point where businesses dip their toes in the Apple pool to see if the enterprise experience improves.

At New York Media (publishers of New York magazine and NYMag.com), Albert C. Lee, director of IT, says he has used Macs for some employees in the organization but has run into problems with service-level agreements. But that's not going to stop him from potentially adding iPhones to the enterprise when it the capability to access e-mail from a Microsoft Exchange server becomes possible in June.

"A good majority of our enterprise users already have an iPhone for a personal communications device," he says. "The idea of empowering a large population of your corporate users with enterprise push e-mail and remote calendar management, especially when they had none before, is pretty attractive."

Apple to Offer 3G iPhone From This Year

Reports that Apple is cutting production orders on current iPhone models support rumors that a 3G version of the cutting-edge device is in the works for midyear, analysts say.

Last week, Craig Berger of FBR Research reported to clients that Apple has been accelerating production cuts for the iPhone and iPod Touch. "For both iPods and iPhones, we believe Apple was previously targeting a roughly 50 percent quarter-over-quarter decline for first-quarter units, whereas we now think the firm is targeting a 60 percent quarter-over-quarter unit decline for first-quarter units," Berger said.

In a research note Monday, analyst Richard Gardner of Citigroup cited the falling production numbers as an indicator that Apple is gearing up for a new model, The Washington Post reported. In Europe, iPhone sales have been underwhelming. "We believe that lack of 3G has been a significant headwind for iPhone in Europe, where 3G is already pervasive," Gardner said.

Not If, But When

Apple told Citigroup analysts that it plans to enter Asia and more European countries by the end of the year. Apple and AT&T, the exclusive U.S. carrier, have separately indicated that a 3G iPhone will be released this year.

"You'll have it next year," AT&T CEO Randall Stephenson told an audience in November when asked about a 3G iPhone. That comment suggested AT&T would be building out a 3G network this year, and the company recently made good on that promise, announcing plans to roll out 3G in 350 U.S. markets, including all of the largest 100 cities.

Tim Bajarin, principal analyst with Creative Strategies, said that while 3G is definitely in Apple's future, "the timing of this is still in question." Whenever it happens, the development will "help Apple get even more attention for the iPhone in the U.S. and abroad in markets where it is legal."

Apple has yet to officially roll out the iPhone in Asia, where "3G networks are the norm," Bajarin said. If a 3G iPhone is close to completion, Asian consumers might see carriers offer the new version this year. Such a move would "help them sell a lot of these phones through telecom partnerships in key Asian markets," Bajarin said.

The lack of a 3G iPhone hasn't stopped Asians -- and people in about 100 countries where the iPhone isn't officially sold -- from snapping up Apple's trendy phone. A Business Week investigation reported this week that between 800,000 and 1 million iPhones are illegally unlocked for use with carriers other than Apple's official partners.

Thriving Gray Market

The Business Week article described a worldwide pattern of visitors to the U.S. buying as many iPhones as they can -- the limit is five from Apple and three from AT&T. Research from Gene Munster, an Apple analyst with Piper Jaffray, described busloads of Asian tourists descending on Apple Stores, with each person buying the maximum.

It's not just individuals buying up phones and unlocking them, though. Gray-market entrepreneurs are developing a entire economy around buying iPhones, unlocking them and reselling them.

Business Week reported that workers in Chinese factories may be providing iPhones to resellers. One distributor said its supplier recently gave him an internal Apple document -- likely stolen -- showing the schematics and repair instructions for the original iPhone, pure gold for the iPhone-unlocking businessman.

With all the hunger for iPhones around the world, carriers not blessed by Apple are not exactly trying to stop customers with unlocked phones from using them on their networks, according to one aftermarket reseller. Nathan Walberg, who sells an altered SIM card for the iPhone for $44, says he gets calls not only from customers around the world but also from carriers.

"I don't know if [these carriers] can legally encourage unlocking, but they're not going to discourage it," Walberg told Business Week. "This market will go on forever, because I don't think there's a way for Apple to stop us."

NJ teen untethers iPhone from AT n T network

A 17-year-old hacker has broken the lock that ties Apple Inc.'s iPhone to ATnT's wireless network, freeing the most hyped cellphone ever for use on the networks of other carriers, including overseas ones.George Hotz of Glen Rock, N.J., confirmed Friday that he had unlocked an iPhone and was using it on T-Mobile's network, the only major U.S. carrier apart from AT&T that is compatible with the iPhone's cellular technology. In a video posted to his blog, he holds an iPhone that displays T-Mobile as the carrier.Although the possibility of switching from AT&T to T-Mobile may not be a major development for U.S. consumers, it opens up the iPhone for use on the networks of overseas carriers.The phone, which combines an innovative touch-screen interface with the media-playing abilities of the iPod, is sold only in the U.S.ATnT Inc. spokesman Mark Siegel said the company had no comment and referred questions to Apple. A call to Apple was not immediately returned. Hotz said the companies had not been in touch with him.The hack, which Hotz posted Thursday on his blog, is complicated and requires skill with both soldering and software. It takes him about two hours to perform. Because the details are public, it seems likely that a small industry may spring up to buy U.S. iPhones, unlock them and send them overseas."That's exactly, like, what I don't want," Hotz said. "I don't want people making money off this."He said he wished he could make the instructions simpler, so users could modify the phones themselves."But that's the simplest I could make them," Hotz said. The iPhone has already been made to work on overseas networks using another method, which involves copying information from the Subscriber Identity Module, a small card with a chip that identifies a subscriber to the cellphone network.The SIM-chip method does not require any soldering, but does requires special equipment, and it doesn't unlock the phone; each new SIM chip has to be reprogrammed for use on a particular iPhone.Apple may be able to modify the iPhone production line to make new phones invulnerable. The company has said it plans to introduce the phone in Europe this year but it hasn't set a date or identified carriers.