BusinessWeek sources are reporting that between 800,000 and 1.5 million unlocked iPhones are in use on wireless networks that are not authorized by Apple. There is speculation that workers assisting in the production of the iPhones may be contributing to this problem.

Even though Apple has not introduced the iPhone in China, 400,000 of these unlockd iPhones are in use on China’s largest wireless network, China Mobile. In-Stat, an Arizona based market research and consulting firm, said China Mobile gave them the 400,000 estimate.

“The figure surprised us as it is fourfold of that we estimated before,” In-Stat said. “We have never doubted that the iPhone will achieve greater success than iPod in China if Apple teams with China Mobile to launch its Chinese version.”

Officially, the iPhone is for sale in only a handful of countries including the U.S., Germany, France, and Britan. Apple has exclusive contracts with wireless providers. In the U.S., the exclusive carrier is AT&T. Authorized partners of Apple also include O2, Orange, and Deutsche Telekom’s T-Mobile.

Companies that specialize in unlocking cell phones and software hackers were already looking for ways to make the iPhone work on unauthorized networks by the time it went on sale June 29, 2007.

It seems that the iPhone is finding its way into markets around the world even though Apple has not yet signed with providers in the areas, which is where a majority of the unlocking seems to be occurring. China is leading this pack and BusinessWeek readers report iPhone sales in Brazil, Canada, the Dominican Republic, Indonesia, Israel, Nigeria, Peru, Poland, Russia, and the United Arab Emirates.

WHAT’S APPLE DONE ABOUT IT SO FAR?

Apple made some effort to stop the problem after the iPhone was released last June by issuing an update to its iTunes software that caused some unlocked iPhones to stop working.

In November of last year, three days before a firmware update, Apple started warning unlocked iPhone owners and those with 3rd party applications installed, that the new software would likely disable modified phones. Apple warned users that the update could cause “irreparable damage to the phone’s software,” thus voiding the companies limited warranty on the device.

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