Apple, AT&T Try to Plug iPhone Revenue Gap

Or users could hack their iPhones to unlock it and use it on any other network such as T-Mobile.

The no-contract option, albeit expensive, will allow users to avoid penalties that come with hacking and unlocking the iPhone, while retaining some freedom and flexibility, say analysts. Unlocked iPhones are left out of security and software updates and the unlocking process voids the warranty on the phone.

The 3G iPhone will be available in more than 70 countries later this year, beginning with sales in 22 countries on July 11. By contrast, the original iPhone was available in only six countries.

"Given the number of countries it is going to be sold in, my strong opinion is that it will effectively get rid of the grey market in iPhones," says Wolf.

The two countries of note that Apple's missing are South Korea and China, both major cell phone markets. The duo are also among the biggest markets for unlocked iPhones, industry experts say.

Online chatter has it that Apple is close to inking a deal with one of the major Chinese mobile service providers, China Mobile.

"The attraction of an unlocked iPhone will diminish if Apple has a carrier partnership in China," says Gottheil as many users are likely to buy a phone with warranties and service updates rather than a hacked model.