Asia Underground Market Awaits iPhone

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As Apple Inc. rolled out its newest iPhone on Friday, dealers and buyers were anticipating the popular device in Asia's thriving underground marketplace in as little as a few days.

The first buyer in Hong Kong, Ho Kak-yin, holds his new iPhone during the first day of the release...

The first buyer in Hong Kong, Ho Kak-yin, holds his new iPhone during the first day of the release in Hong Kong, Friday July 11, 2008. As Apple rolled out its newest iPhone in Asia Friday, dealers and buyers said it's only a matter of time _ maybe as little as a few days _ before the popular device hits the region's thriving underground marketplace.

(AP Photo/Kin Cheung)

The iPhones are nothing new to Asia, where enthusiasts from Bangkok to Shanghai already sport fake and unlocked versions of last year's models — unlocked so they can work with any carrier, not just the Apple-authorized ones.

Now, electronics markets are preparing for an influx of iPhones capable of 3G, or third-generation, cell phone technology.

In the Chinese territory, ads pitching unlocked iPhones and services to unlock them were everywhere in a shopping mall with three floors of cell-phone stores.

Shop owner Chris Lau said he's already taken orders for the new iPhone from 40 people and estimated its arrival on the gray market in about a week.

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"I'm not 100 percent sure the stocks we are receiving will be unlocked, but I don't think it will take long to crack it," he said, referring to the practice of hacking iPhones' computer code so they can be used with different mobile service providers.

Legal purchase of an iPhone usually locks a buyer into a service provider partnered with Apple, such as Softbank Corp. in Japan.

Candice Lam was among those considering a gray-market purchase because she didn't want to be locked into paying for a two-year contract with Apple's local carrier, Hutchison Telecom.

"Some of my friends are already using it. I want to have one myself," the 20-year-old university student said while browsing phone shops. "I already have a contract with one operator. I don't want to sign another just for a phone."

Vendors didn't have any stocks at Beijing's Nurenjie shopping complex, a known center for sales of smuggled iPhones across the street from the new U.S. Embassy. Apple does not sell the iPhone in China, but unlocked versions brought from other markets are plentiful.

Demand for the new device was running high, with some dealers saying unlocked 3G-ready iPhones should fetch about $700 once they're available. The majority will probably come from the United States and Hong Kong, they said.