The iPhone lost its virginity when legendary teenage hacker George Hotz used a soldering iron to cut open Apple's defences and unravel the secrets of the iPhone. The exploit famously inspired hordes of geeks who tried to get the better of Apple by offering iOs jailbreaks and finally setting up underground app stores that made decent business.

In many ways the jailbreaking wizards walked ahead of the tech giant, attracting people, and of course money. Now, iPhone jailbreaking is big business, and it's not exactly unlawful either. The industry thrives in spite of Apple's protestations and legal as well as moral fights.

Early jailbreakers were inspired by rockstar-like fame, stardom, and the urge to test limits of creative ambition. Money followed in time and soon some of the jailbreaking vanguard started following money. Now iPhone jailbreaking is a multi-million dollar semi-underground business and there are legal loopholes that facilitate the growth of jailbreaking.

WHY JAILBREAK?

Here's an example of how carriers get beaten by jailbreakers. Carriers charge extra for tethering, but jailbreakers have a way to work around this. Jailbroken app MyWi is a perfect example. This was born out of jailbreakers' frustration over carrier charges for tethering.

MyWi alllows you to create a wifi hotspot with your iPhone. I have a wifi only iPad and I never even considered purchasing the 3G version. I simply tether my iPad to my iPhone, Allyson Kazmucha writes in TIPB.COM. And the price tag of around $20 is worth it, Kazmucha says. It may seem like a hefty price tag but you’ll pay that in data and/or tethering fees in less than 2 months. You’ll only pay for MyWi once. You do the math.

MyWi was crafted by Mario Ciabarra, who then ran an app store called Rock Your Phone, which he later merged with Cydia. My3G is another smart option. This app allows one to trick the iPhone into thinking there is a wifi connection when it is really on the carrier network. This trick comes in handy if you need to download an app over 20MB and aren’t in range of wifi, says Kazmucha.

Or see some other examples. There is an app called the wi-Fi Sync that wirelessly syncs iPhone to iTunes without a USB cord. Then there are other useful apps like AdBlocker, which saves on time and speed by squeezing out ads while surfing on Safari.

CYDIA

Apple has the App Store, jailbreakers have Cydia, they say. Owned and managed by jailbreak cult figure Jay Freeman, Cydia reportedly attracts about 1.5 million visitors to its store every day. Considering the popularity of umpteen jailbroken apps, one can imagine the business it generates.

Cydia is rather a big brother in the jailbreaking world, some sort of a monolith. The Washington Post reported that Cydia now earns about $10 million in annual revenue and counts about 4.5 million active weekly users hunting for apps. Freeman launched Cydia in 2008. And his outfit is growing by the day and expanding operations. Freeman told the Post that he is hiring too!

There are hordes of jailbreaking bandwagons which flourish on users' demand for open-ended technologies that govern their choicest devices. The Dev Team, MODMYI and THEMEIT are some other examples.

LEGALITY

In a landmark ruling in July last year, the U.S. Library of congress declared that jailbreaking does not violate copyright protections. The Electronic Frontier Foundation, a San Francisco-based privacy-rights group, had petitioned the library, arguing that jailbreak of Apple devices don’t infringe on copyright.

“Now people can go ahead and fix their phones and jailbreak them so they can run all sorts of different applications,” the Foundation's lawyer told Bloomberg. “They can make full use of the phone they bought without some kind of legal liability hanging over their head.”

Apple had told the Library of Congress, which oversees copyright, jailbreakers violated copyright by carrying out “unauthorized modifications”. Apple also said it suffered substantial expenses owing to the practice.

According to the Post report, jailbreaking the phone can nullify the warranty. But jailbreakers know how to steer clear of most other troubles. “We have spent a good amount of legal research making sure we’re not in the wrong,” Ciabarra, who is now running Intelliborn, told the Post. “We’re trying to stay one step ahead of what Apple does. He added that neither AT&T nor Apple has contacted him or his company.

APPLE, AT&T REACTION

The jailbreaks thrived and multiplied not because Apple did not try to kill them off. The tech giant tried every means in its arsenal, fortified every new launch of the iOS with better technology, but a bunch of die-hard jailbreak fanatics would prise it open and make the iPhone do things that Steve Jobs never it would. Now the underground jailbreaking ecosystem has seemingly outrun Apple.

Apple launched its official App store in 2008, hoping it would halt the jailbreaking juggernaut on its tracks. Now people had an option to download official apps, so why would they go to jailbreaks?

But jailbreakers regrouped and turned to circumventing iPhone's restrictions and giving people once forbidden access to the devices they own. Also, Apple's periodic rejection of several apps gave further incentive to put up parallel app stores that sell apps that work around famed Apple censorship.

Apple and AT&T are still out there, trying to squeeze jailbreakers out of business and confront them with their corporate might. The latest example was Toyota's withdrawal of a new launch theme running on Cydia and an ad campaign on ModMyi.

Toyota had put up a downloadable theme on Cydia as part of the launch of new car Scion. The theme was to be downloaded on to iPhones. It also had launched an ad campaign on ModMyi, becoming the first top league corporate to advertise on jailbreaking sites.

However, Apple pressured the car major into pulling out the theme and ad campaign. Toyota said it didn’t want to destroy good ties with Apple.