Apple sends iPhone hackers back to the drawing board: 1.1.1 firmware uses different encryption scheme

"It's a cat-and-mouse game," said Steve Jobs. "We try to stay ahead. People will try to break in, and itâ??s our job to stop them breaking in."

The cat has caught the mouse, for now.

In a serious setback for the capability to install third-party native applications on the iPhone, as well as activate the device without an AT&T SIM card, Apple has changed the encryption methodology for the iPhone with the 1.1.1 firmware/software update, meaning that old processes for "jailbreaking" the device -- putting it into a mode where files can be written to and from the phone -- are now defunct.

What this means for unlocked phones is the following: these devices can be upgraded to version 1.1.1 of the iPhone software, and apparently remain unlocked. However, the phones cannot be reactivated -- a step that is necessary for normal function -- after the update by traditional third-party means (iActivator, etc.), nor jailbroken. In addition, because current software unlock mechanisms change the IMEI number (a special code used to identify the mobile device on a network), they cannot be re-activated using an AT&T SIM card. In other words, these phones are dead in the water with regard to phone calling functionality.

As explained by our friend Lucas Newman who worked to develop the first third-party native game for the iPhone ("Lights Out!") and put together an informal SDK for the device, finding the encryption key is harder now. "It used to be plaintext in the RAM disk," said Newman. "But they changed it, and no one knows how to get at it quite yet."

We previously reported that none of the current tools for jailbreaking the iPhone, including AppTapp, iNdependence, iActivator, iBrickr, etc.

The new encryption method is apparently similar to that used by the iPod touch, which hackers have thus far had little success in jailbreaking.

Apple's change is also bad news for tools that make modifications without requiring jailbreaks, like Ambrosia Software's iToner, designed to add ringtones to the device without going through iTunes. Ringtones placed on the iPhone by that application did not survive the update to firmware/software version 1.1, and new ringtones cannot be transferred to devices that have been updated.

While this is certainly a serious curve-ball Apple has thrown, the iPhone hacking community's ingenuity shouldn't be underestimated. It was a matter of hours before jailbreak tools were rewritten to properly function with the last firmware update; while the current release appears to be of a different structure entirely, the hacking community is already banging on the door. In the words of one poster to the Hackintosh forums (where iPhone hacking efforts are rampant): "the fun starts again"