Once the hobby of tech geeks, iPhone jailbreaking now a lucrative industry

April 7, 2011

Kevin Lee, a George Mason University senior, says he earns about $50,000 a year with an illicit-sounding pitch on Craigslist: “Get Your iPhone Jailbroken Today.”

Within minutes, the computer science major can download code onto his customers’ iPhones and fling open the portal to an alternative world of apps and software that Apple condemns. The jailbreak perks include: tethering the iPhone’s Internet connection to a laptop or iPad without paying extra AT&T charges; swapping out the AT&T or Verizon service for a cheaper carrier; or, customizing the iPhone with 3-D screens, bouncing icons or funkier fonts.

An early form of jailbreaking started shortly after Apple unveiled the iPhone in 2007, but the practice has now evolved into a lucrative industry with millions of consumers. Quashing many doubts about jailbreaking’s legality, the Library of Congress ruled in July that the practice did not violate Apple’s copyright.

“To be honest, when I first started, I did it for my friends, myself, but it has snowballed from there,” said Lee, who jailbreaks iPhones to enable new screen designs, then “unlocks” them so customers can switch wireless carriers. “I was getting five to 10 customers a week, now it’s 30 to 40. I just had one customer from the Mongolian embassy who was moving to the capital of Mongolia, and he wanted to use the iPhone there.”

The primary jailbreak apps store, Cydia — named after the insect that bores into apple trees — now earns about $10 million in annual revenue and counts about 4.5 million active weekly users hunting for apps. Its dominance in the jailbreak world has grown so much that last year, when a rival store began eating into its market share, Cydia simply merged with the competitor, unleashing howls about a monopoly.


An early form of jailbreaking started shortly after Apple unveiled the iPhone in 2007, but the practice has now evolved into a lucrative industry with millions of consumers. (Laura J. Gardner/AP)

Some developers, meanwhile, are raking in tens of thousands of dollars in sales off their apps, technically called “packages,” “themes” or “tweaks” in jailbreak parlance.

In what might be the ultimate sign that the jailbreak industry is losing its anti-establishment character, Toyota recently offered a free program on Cydia’s store, promoting the company’s Scion sedan. Once installed, the car is displayed on the background of the iPhone home screen, and the iPhone icons are re-fashioned to look like the emblem on the front grill.

Toyota was also the first major corporation to offer an ad to the jailbreaking site, www.modmyi.com, whose traffic and revenue have doubled since 2010.

“We’ve seen expansion across the board. The Toyota ad and theme, to me, meant there was a turning of the tides and that jailbreaking is becoming more mainstream,” said Kyle Matthews, the co-owner of Modmyi.com. “The industry just keeps increasing; there are even repair stores that will jailbreak for you.”

Apple and AT&T have been trying to crack down on the booming black market. Matthews said Apple pressed Toyota to remove the theme and the ad this past week, which it did. Apple declined comment for this article.

In the past, Apple has said jailbreaking the iPhone or iPad might void the device’s warranty. Two years ago, Apple argued to the Library of Congress, which oversees copyright, that the “unauthorized modifications” constituted a violation, and that the company incurs “very substantial expenses” investigating customer complaints about jailbroken iPhones that don’t work.

Mark Siegel, an AT&T spokesman, said the company can detect which customers are tethering their iPhones to other devices using an unauthorized hack; those customers, he said, are sent “polite” letters laying out three options: they can pay AT&T $20 a month on top of the data plan costs; stop the unapproved tethering altogether; or ignore AT&T but get automatically enrolled and billed anyway.

Siegel declined to say how much revenue is lost from the tethering tools, saying only that a small number of customers do it. He also declined to discuss whether or how AT&T challenges the creators of the hacks. Because of its technology, AT&T is more vulnerable than Verizon to unlocking, programmers say.

At the top of the jailbreaking hierarchy sits Jay Freeman, 29, the founder and operator of Cydia, the biggest unofficial iPhone app store, which offers about 700 paid designs and other modifications out of about 30,000 others that are free. Based out of an office near Santa Barbara, Calif., Freeman said Cydia, launched in 2008, now earns about $250,000 after taxes in profit annually. He just hired his first full-time employee from Delicious, the Yahoo-owned bookmarking site, to improve Cydia’s design.

“The whole point is to fight against the corporate overlord,” Freeman said. “This is grass-roots movement, and that’s what makes Cydia so interesting. Apple is this ivory tower, a controlled experience, and the thing that really bought people into jailbreaking is that it makes the experience theirs.”

Not everyone is as open as Freeman about their contributions to this black market apps store. Some jailbreakers and developers declined speak publicly. And the Craigslist ad and e-mail address posted by Lee, the George Mason senior, is no longer online. After an initial interview with The Washington Post, he declined further comment through an assistant.

Many of the programs offered by these developers are unavailable at the Apple app store, and some of the most popular items are not inexpensive:

The $10 Wi-Fi Sync app lets you wirelessly sync your iPhone to iTunes without needing a USB cord. For $2.19, AdBlocker lets you surf the Apple Safari browser without ads, potentially reducing data usage and speeding up page loads. And the $2 Elert app allows users to keep playing Doodlejump, for instance, without having to leave the game to see incoming e-mails.

Freeman says he takes 30 percent from developers that list programs on his store. He spends most of that money on PayPal transaction fees and server costs.

Freeman himself has had to fend off accusations that he has been playing overlord in the underworld. A new jailbreak store called Themeit opened in January, but only after its owner, a French Web consultant executive, refused to give in to Freeman’s requests that it not launch.

“Once he heard about Themeit, he wrote me super long e-mail telling me not to do it, that it was going to break up the jailbreak community,” said Gabriel Faucon, Themeit’s owner. “There’s a lot of money involved, and he is trying to pass himself off as the little guy communist trying to save the world.”

Last year, Freeman was more successful in gobbling up an even bigger rival, Rock Your Phone, whose owner Mario Ciabarra, runs a jailbreak app design firm. The terms: Freeman has to promote the apps Ciabarra’s company creates on Cydia’s home page; and, instead of the usual 70-30 revenue split, Ciabarra’s business gets to keep virtually all of the sales, according to Freeman.

“Sometimes, eliminating competition may not be that great, but the reality is that we didn’t compete on prices, but on attracting audiences,” said Ciabarra, 33. “With the audience, you get the money. And I saw an exit strategy and I wanted to focus on developing” apps.

Ciabarra has created some of the more popular — and pricey — jailbreak apps, which have been downloaded on more than 5 million devices in more than 150 countries, he said. His $20 MyWi app hooks up your iPhone’s Internet connection to your iPad or laptop, but he says he does not endorse using the program to avoid monthly charges.

Ciabarra said AT&T or Apple have never contacted him or his company, Intelliborn. “We have spent a good amount of legal research making sure we’re not in the wrong,” he said. “We’re trying to stay one step ahead of what Apple does. We’re now offering MyWi OnDemand, which disconnects the wireless service when you’re not using your devices. That way, you can save power, and don’t have to turn your phone on and off to get online.”

While many are raking it in from their black market apps, others are still making smaller but respectable incomes. Rob Grohman, an IT technician from Mechanicsburg, Pa., has earned about $100,000 in the past two years off of his handful of paid themes that redesign a user’s iPhone screens. Most of that was made in 2010.

In his regular job, Grohman said he makes about $50,000 a year repairing computers at a health insurance company. “I made more money off of themes than my day job,” he said with a chuckle.

Ian Shapira is a features writer on the local enterprise team and enjoys writing about people who have served in the military and intelligence communities. He joined the Post in 2000 and has covered education, criminal justice, technology, and art crime.
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