Grey Market: 1.3 million i Phones smuggled out of US

In past, we have blogged about Apple's attempt to control the distribution of its popular iPhone. It is apparently losing the "war" to smuggling, from the US back to China.

There the phones’ digital locks are broken so they can work on local cellular networks, and they are outfitted with localized software, essentially undermining Apple’s effort to introduce the phone with exclusive partnership deals, similar to its primary partnership agreement with AT&T in the United States.

This kind of smuggling is called a "grey market," where consumers circumvent the attempt of a private company to control pricing or distribution, to distinguish it from a "black market," where consumers circumvent governments attempt to control pricing or distribution of a product.