unlock

The iPhone 5 can now be purchased unlocked in the U.S. via the Apple Store. An unlocked iPhone allows Apple customers to buy the device without agreeing to a two-year carrier contract, however, this also means users are stuck paying an unsubsidized price. Apple is offering the 16GB model for $649, the 32GB model for $749 and the 64GB model for $849.

The unlocked iPhone 5 only works with GSM wireless networks such as AT&T and T-Mobile (T-Mobile customers considering buying an unlocked iPhone 5 may want to wait until next week to see if the T-Mobile iPhone rumor is true). The unlocked iPhone 5 does not support CDMA-based carriers such as Verizon Wireless or Sprint, and requires a nano-SIM card to work.

Deutsche Bank analyst Chris Whitmore thinks Apple should and will embrace the mid-range/pre-paid mobile phone market in 2011. Two-thirds of the 1.5 billion mobile customers worldwide are pre-paid users, and Whitmore believes Apple will try to reach these customers by releasing an unlocked iPhone priced between $300 and $500. Perhaps the iPhone 4S?

“With Nokia and RIMM struggling,” Whitmore said, “the time is right for Apple to aggressively penetrate the mid range smart-phone market to dramatically expand its market share.”

Whitmore predicts that an affordable iPhone priced around $349 will not negatively impact profitability, and will help give Apple a bigger share of the $70 billion worldwide market.

Firmware update 2.2.1 (5H11a) for iPhone and iPod Touch is now available from Apple via iTunes. Besides some bug fixes, 2.2.1 also includes a baseband update, which brings the modem firmware to version 02.30.03. The iPhone Dev-Team immediately suggested that users with jailbroken and/or unlocked devices wait for further instructions while they continue to inspect the update.