First it was AT&T selling iPhones off-contract, which suggested a stock clear-out, and now it’s Apple, which all but confirms the sell-off.

Apple began selling contract-free iPhones at their brick-and-mortar retail locations on Thursday, a fact reported by AppleInsider and confirmed by Apple’s flagship Fifth Avenue store in New York, via CNNMoney.com. Buying from Apple apparently carries less restrictions than buying from AT&T, but the phone is still technically locked to the only official U.S. iPhone carrier.

Pricing is also still the same as what we’ve seen from AT&T. The entry-level 8GB model will cost you $599, while the 16GB version will set you back $699. At those prices, the iPhone costs more than most netbooks, but to some, the additional freedom the extra $400 buys is worth the price of admission. According to reports, customers will be able to purchase unlimited numbers of iPhones from Apple stores, and won’t have to be AT&T customers to get one. If Apple isn’t actively encouraging unlocking, they know that it’s going to happen, and they’re clearly turning a blind eye in the interest of moving stock.

There’s no word on whether this deal will come to other international stores, or when they’ll actually be stocked at Apple retail locations. It’s unclear how many people will go for this, since that’s an awful lot of money to part with for a product that’s soon to become previous generation technology. Personally, I’m just hoping it drives down the price of the used iPhone market so that I can pick up an unlocked 8GB for less than $400 via craigslist.

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This time around, it took a little longer, but the iPhone 3G has finally been unlocked, thanks to the efforts of the hardworking iPhone Dev Team, makers of the Pwnage Tool, which is used for jailbreaking Apple’s handhelds.

The Dev Team reports successful unlocking, using their oddly codenamed “yellowsn0w,” but they’ve yet to release it to the public. Now, they’re working on repackaging it in user-friendly form, like the Pwnage Tool, so that your average end-user won’t have much trouble tossing off their carrier oppressors.

The unlock, which is said to be dropping Dec. 31, requires a number of things from your iPhone in order to work properly. First, your phone must be using the 2.11.07 baseband or earlier, and using the QuickPwn jailbreaking tool or official firmware updates are both advised against, with the only “safe” method listed being updates via the PwnageTool. There are a whole lot of other specific guidelines, depending on the type of phone you have, and what state it’s in relative to firmware updates, etc.

In related news, the recently released 10.5.6 update apparently blocks Pwnage once again, so if you’re New Year’s resolution involves an unlocked, jailbroken iPhone, you might want to hold off. Also note that the Dev Team has yet to find a workaround for the jailbreaking protection built in to new Apple notebooks, which prevent vanilla, factory phones from being pwned. Users who are already using Pwned 2.1 can still upgrade to Pwned 2.2, however. And, as with any kind of jailbreaking antics, you proceed at your own risk. Potential bricking of unauthorized unlocked phones in the future by Apple is not inconceivable, after all.

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What about you TAB readers? Has anyone successfully updated with an unlocked iPhone? Here’s your opportunity to brag!

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