After Google failed to bypass carriers with Nexus One, Apple couldn't resist carrier pressure and folded its plans to weave the SIM card into the hardware in partnership with Gemalto.

A report by Sunday Telegraph suggested that Apple gave up on the plan after ruffled operators threatened to curtail subsidizing iPhones.

The report that Apple was working on a plan to craft a SIM that is integrated with the iPhone was reported by Gigaom in October. The maturation of this strategy would have allowed Apple to sell iPhones directly from its retail or online store. The feature was targeted at Europe, which uses GSM standard.

Sunday Telegraph however reported that Apple will continue to pursue the baked-in SIM program on its iPad platform.

The embedded SIM in iPhone hardware would have offered the option of choosing the carrier but still restricting the porting of SIM cards to other devices.

Also, making iPhones available directly through its Apple retail stores and online would have reduced its dependence on carriers. Initially the carrier-exclusive strategy helped iPhone gain mileage it needed but with Android phones offering the choice of carriers, Apple needs to maintain a presence across various networks.

The dilution of Apple's stand is reminiscent of Google's Nexus One strategy whereby it wanted to sell the Android phone directly to customers bypassing the carriers. Google's strategy was to offer the phone subsidized by mobile advertising revenue rather than the carrier-contract subsidy which makes a user tied to a contract.

However, Nexus folded in May 2010 as the trump card is still with the cellular service providers as they own the network.

According to Gigaom the Gemalto SIM would have been be uploaded on a chip that has expandable flash and ROM. The ROM will contain data provided by Gemalto with everything related to IT and network security and the flash component will receive the carrier related data via a local connection which could be the PC or a dedicated device, so it can be activated on the network.

The feature would have let loose the iPhone from the grip of a single service provider, allowing U.S. users to move to other providers besides AT&T. (In some European countries, iPhones are not tied to single providers).

However, Apple has met the same resistance that Google met regarding Nexus One and until Apple and Google own their very own network carriers' grip will continue to hold them back.