Apple tightly controls certain aspects of the iPhone. The hacker community has found many workarounds, most of which are disallowed by Apple and threaten to void the device’s warranty. “Jailbreaking” allows users to install apps not available on the App Store or modify basic functionality. SIM unlocking allows the iPhone to be used on a different carrier’s network.
Activation

The iPhone normally prevents access to its media player and web features unless it has also been activated as a phone with an authorized carrier. On July 3, 2007, Jon Lech Johansen reported on his blog that he had successfully bypassed this requirement and unlocked the iPhone’s other features with a combination of custom software and modification of the iTunes binary. He published the software and offsets for others to use.

Unlike the original, the iPhone 3G must be activated in the store in most countries.[200] This makes the iPhone 3G more difficult, but not impossible, to hack. The need for in-store activation, as well as the huge number of first-generation iPhone and iPod Touch users upgrading to iPhone OS 2.0, caused a worldwide overload of Apple’s servers on July 11, 2008, the day on which both the iPhone 3G and iPhone OS 2.0 updates as well as MobileMe were released. After the update, devices were required to connect to Apple’s servers to authenticate the update, causing many devices to be temporarily unusable. A year later, Apple released the 3.0 software two days before the iPhone 3GS to avoid such issues.

Users on the O2 network in the United Kingdom, however, can buy the phone online and activate it via iTunes as with the previous model. Even where not required, vendors usually offer activation for the buyer’s convenience. In the U.S., Apple has begun to offer free shipping on both the iPhone 3G and the iPhone 3GS (when available), reversing the in-store activation requirement. Best Buy and Wal-Mart will also sell the iPhone.

Unapproved third-party software and jailbreaking.

See also: Jailbreaking for iOS and iPhone Dev Team