Yellowsn0w from the iPhone Dev team was out on the 1st day of 2009 with the promise to liberate the iPhone 3G from the tight grip of Apple and AT&T. For some, the New Year gift from the unlock experts was a dream come true, however for some it turned out to be a nightmare, as the tool doesn’t seem to work well at first.

The iPhone dev team unlocked the first generation iPhone within months of its launch. The same team managed to jailbreak and unlockd iPhone 3G as well. However, software updates from Apple created unwanted bricking and blocking of the iPhone. Yellowsn0w is breakthrough software that has finally liberated the iPhone from the control of Apple and its wireless partners around the world. Many users have installed the software and are reporting that they can use their iPhones on any network.

The latest development came as a threat to AT&T as the carrier stands to lose those customers who are not happy with its patchy network coverage and frequent call drops. Officially unlocked iPhones are available in Hong Kong, Australia, Belgium and Italy. However, they come at a steep price. With Yellowsn0w around, there is no more need for iPhone fans to ship unlocked iPhones from outside the country. The process of unlocking the iPhone has become a lot easier now.

Yellowsn0w also comes in handy for those frequent international travelers to save money. Travelers can now purchase airtime from local network carriers anywhere around the world using unlocked iPhones. This again implies loss for the contract network carriers as the revenue earned from the high roaming charges is sure to be lost.

Consumers in the countries where Apple is yet to launch the iPhone can now purchase the iPhone from any country where the device is already launched and unlock it in no time, and use on any network of their choosing.

Having said all this, now we come back to what might come next? Apple so far has not commented on this development. AT&T also has chosen to remain silent. However, considering earlier cases of unlocking, Apple is very likely to release a software update to retaliate.

Finally, the software being named Yellowsn0w is a mystery of what might happen next.