Image via Paul Stamatiou
It’s an open secret that there are legions of iPhone owners who operate their phones outside of Apple’s officially sanctioned networks AT&T, O2, Orange, and T-Mobile Germany, either because they live outside of the countries where the iPhone is on sale or because they’re aware that AT&T has terrible coverage.

What is less well-known is just how big the problem has gotten. BusinessWeek reported last week that 800,000 to 1 million iPhones have gone AWOL after legitimate purchase. And now this weekend, analyst In-Stat claims that 400,000 of those iPhone are all in operation on China Mobile, the largest carrier in Mainland China.

This makes a few things clear:

1. Apple should get a distribution deal in China as fast as they can. They’re just leaving money on the table right now.
2. Apple would be making more money if they hadn’t gone with an exclusive network for each market. If the iPhone ran GSM and CDMA and was available far and wide, they would be making more money and they wouldn’t need to concern themselves with unlocking. By getting into bed with AT&T and making a part of its revenue dependent on “legitimate use,” Apple has taken an anti-consumer stance that will hurt it in the long run. Unlocked iPhones are only a problem because they depend on an outdated business model. Apple should be embarrassed for taking part in it.

Via iLounge

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Members of the Hackin0sh development community report that an old exploit that was used to crack the PlayStation Portable’s firmware almost two years ago could hold the key to re-opening up iPhones loaded with the 1.1.1 firmware that closed them back up.

Notes Hackint0sh reader Locked:

It looks like the dev team is up to something. I have been following them over at IRC and it looks like Mobile Safari on both the touch and the iPhone are suffering from a one year old TIFF exploit.

Basically, opening a carefully crafted TIFF image will crash mobile safari, causing a buffer overflow and allow for arbitrary code execution. This same exploit was used more than 1.5 years ago to crack the PSP firmware.

So, nothing to report, yet, but there might yet be life for third-party applications on the iPhone. As Steve Jobs himself has said, this is a game of cat and mouse, and with application development, at least, I want the mice to win…

Via Winonmac via Digg

And we’re off to the races. Despite Apple’s interest in restricting iPhone development to themselves and trusted third-parties like Google, clever programmers have delivered native software for the device — including an addictive-looking game called “Lights Off,” released today by Delicious Monster.

It’s a standard puzzle-game — tap the buttons to turn out all the lights in the 5×5 grid — but the presentation is very slick, and the iPhone interface alone makes it more compelling than it would be on OS X for Mac.

As with all unsupported iPhone software, it takes some warranty-voiding mojo to make “Lights Off” install, but the app’s creators, Lucas Newman and Adam Betts, helpfully include full instructions:

Installing third-party applications on your iPhone is not for the faint of heart. For more in depth instructions on iPhone modifications, look at the iPhone Dev Wiki.

1. Download iActivator and use it to “perform jailbreak” on your iPhone to allow access to the entire filesystem, which is necessary to upload applications.

2. Use iPHUC to upload Lights Off.app to the Applications folder on your iPhone.

3. Install SSH (or the alternate version) on your iPhone, and run the command: chmod +x “/Applications/Lights Off.app/LightsOff”

Not for the faint of heart, as you can see. But still: Blinking lights! Blinking lights and the satisfaction of walking on forbidden ground!

Via Daring Fireball.