A couple of disclaimers to start with. First I've already been called an Apple apologist for the analysis I'm about to present here. That argument may makes it easier to dismiss what I have to say but it isn't the case and in fact I still get much of my search traffic to this site from my criticisms of Apple which I'm derided for on Apple fan sites. Second, I'm the owner of an iPhone and at one time I may have had ringtones on it that weren't Apple sanctioned, rather weren't RIAA-sanctioned but we'll get to that in a minute.

Background

To be certain Apple is a publicly traded company. As such it has one real motive at the end of the day. Like all companies in a capitalist society it is in the business of making money for share holders. There are companies that pursue this goal in different ways but the profit motive is what keeps the board in place and Steve Jobs in the CEO chair.

Another question is often interwoven with the firmware and ringtone question. That is the question of whether Apple should have done an exclusive deal with AT&T. However, that is really a separate discussion and since every person who has purchased an iPhone in the United States has done so with the clear understanding that AT&T will be their carrier it doesn't warrant consideration as a part of this piece. A similar assumption holds true for the information that the iPhone would be closed to developers other than what could be done through the web browser. It could not have been any clearer from the announcement of the forthcoming product back in January that it would not be open to developers.

The final piece of background that one must consider in this equation is where Apple makes its money. For Apple the money is not in the music but in the devices. In fact Apple's Steve Jobs openly supports the end of digital rights management on music even though most of the music sold through the Apple iTunes Music Store has DRM protection.

So with that we have the iPhone released with the following constraints known to every purchaser of the iPhone:

1. The phone will work with AT&T only
2. Apple has an exclusive contract with AT&T
3. Third-parties can only develop web-based applications for the iPhone

So why would users buy an iPhone? Well the short answer in my case is that it is a device that just works. It does everything I ask of it and is simplicity itself. Contrasted with my previous string of Palm Treos I don't have to add third party software to get it to work, I don't need have to fiddle with it or add another email client to get functional email.

Why did Apple "break" hacked iPhones?

With the knowledge that Apple did not condone it several very bright folks figured out how to pry the closed iPhone open and get access to the software guts. Rapidly these same bright folks figured out how to make the phones work with other networks and run programs that weren't officially supported. As everybody knows now Apple's update infamously rendered some of these modified phones inoperable. Why would Apple do such an evil thing? Let's now consider what is good for Apple.

As discussed in the background Apple doesn't make money from the music they sell in the iTunes Music Store. They make the money on the device itself. (The same would seem to be true of OS X but that's a different story). So the question becomes would Apple sell more devices if they can be hacked or if they remain closed? It may seem at first that because people's hacked iPhones were rendered inoperable (though most accounts show they were made workable again) Apple sold hardware by locking the iPhone up tighter. However, this small number of phones cannot really compare to the number of phones they could have sold if consumers were allowed to continue to open up the closed device. The inescapable conclusion is that Apple is contractually obligated to AT&T to make sure the phone stays on the AT&T network.

So if it is a case of keeping the phones on the AT&T network why break other applications like enhanced notepads? The problem lies in trying to have Apple decide which of the applications should be allowed and which to kill. There are plenty of hacks in the iPod-iTunes realm that reveal the cat and mouse games possible here. If Apple were to allow an application called "Advanced Notepad" but disallow "sim changer" then it would be only a matter of time until "Advanced Notepad" would be able to change the phone's network. As such Apple had little choice but to (attempt to) shut down all of the third party iPhone hacks.

Ringtones...

Ringtones suffer from a similar fate. I have never given much stock to the burgeoning ringtone market but there are plenty of folks who plunk down good money on ringtones. Until the iPhone these were limited to tones you can "rent" for a few bucks for a 30-90 day rental (though the cell phone companies try to convince you you're 'buying' the tones). Apple comes along with a $1.98 ringtone that doesn't expire. ($1.98 assumes you purchase the song for $0.99 and then purchase a ringtone for $0.99.)

Here again one must ask why is Apple doing this? Are they making profit off the sales of ringtones? It seems unlikely. What seems far more likely is that the recording industry is firmly in control of this process. This is the same recording industry that sees fit to bankrupt a single mom over three albums worth of songs shared illegally online. This is an industry that already complains
that Apple's DRM is "too lax" because it allows users to play songs on up to five of their own computers. One final clue comes when you look at the songs in the iTunes Store which can be used for ringtones. The selection is extremely limited. At the end of the day, it is the artist's choice how they choose to license their works to be used.

At the end of the day it seems likely that Apple is doing just what they have to in navigating the companies they are doing business with. A side benefit has been the advancements in web applications and paying more attention to how sites work on mobile devices.