Now that iPhoneSIMfree is in the wild, the iPhone Dev Team folks that started all this hackery have been looking to see how the iPhoneSIMfree hack works, and seem to have landed upon the solution. Apparently the thrust of what the iPhoneSIMfree folks figured out was that it's possible to write / flash to the baseband of the iPhone -- the chip that controls the main voice and system functions of the phone. Apparently Geohot resorted to his hardware hack because it was believed this couldn't be done. Now that the Dev Team people have observed this flashing in action, they've launched into writing their very own unlocker using the same method, which will naturally be released free of charge as soon as it's ready. All signs point to the free, standalone unlocker being ready soon. On a slightly shadier note, there seems to be a parallel effort to emulate the iPhoneSIMfree server that does the unlocking magic for those currently willing to pay for the privilege. If it's to be believed, the fake server (and free network unlocking) should be ready to go in a matter of hours.

Update 1: The iPhoneSIMfreefree folks have apparently tracked down a willing iPhoneSIMfree licensee to test out the new methods, so it seems we're certainly getting closer to the server spoof method being ready to go.

6:27PM EDT:
Turns out that license they thought they'd scored fell through, so they're still on the hunt for a working one to get the server spoof up and running. No real word yet on the standalone software from the Dev Team.

6:35PM EDT: On the standalone front, word is "they are in the process of compiling tools that will make a software unlock possible."

7:32PM EDT: Purportedly the Dev Team has their new standalone unlock working and are making calls with a new SIM. At this point the code still needs a lot of cleanup -- the unlock takes 20 minutes, much longer than iPhoneSIMfree -- and certainly isn't ready for end users yet, but it does appear to be working according to those in the know.

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Developing: iPhone Dev Team one step away from free unlock?