The iPhone Dev Team, the developers of the PwnageTool and QuickPwn applications used for unlocking and jailbreaking iPhones and iPod Touches, have announced that they have successfully unlocked the iPhone 3G and will release the unlocking application on New Year's Eve.

Up until now, the iPhone 3G has not been unlockable through software-based methods, with only hardware-based SIM modifications making this possible. The first-generation iPhone has remained unlockable through the various firmware updates, and has generally retained its value quite well as a result, according to typical sale prices on eBay. The iPhone 3G is available unlocked from the factory, but these models are only sold in a limited number of countries.

The Dev Team cautions in their blog that only iPhone 3G's with a baseband version  of 2.11.07 or lower will be unlockable. Users who have already updated their iPhone 3G's to the latest firmware version, 2.2, will not be able to unlock their iPhone 3G's. Additionally, unlocking the iPhone 3G requires that it be jailbroken at the same time.

Mac users who updated to the latest version of Leopard, 10.5.6, that was just released may have problems getting their iPhone into DFU mode, a required part of the jailbreaking/unlocking process. The Dev Team posts tips on how to get around this issue, noting that it does not appear to be an intentional attempt by Apple to block users from jailbreaking and/or unlocking their Apple devices.

It's reasonable to expect that the value of the first-generation iPhone will decrease after this unlock method is released. With internal GPS, the iPhone 3G may be more appealing to potential buyers than the first-generation iPhone, and once it can easily be unlocked, it may become even more desired on the secondary markets like eBay and Craigslist in comparison. If you've got a first-generation iPhone you want to sell, do it now! If you've got a 3G iPhone you want to unlock, don't upgrade to firmware 2.2, if you haven't already.

via Gizmodo