An Apple expert and hacker has shown that the iPhone, in all its various forms and moltings, is child's play to compromise. This comes despite assurances from Apple regarding the 3GS's encryption feature. Bad news for businesspeople of the 21st century, who have glommed onto the iPhone and its service halo like no other device. The wonder-phone has certainly changed the way smartphones and other devices are made, but this isn't the first time Apple's security measures have been described as being seriously lacking.
It seems that with a little creative coding, or access to an insecure computer, the iPhone can be cracked wide open. The encryption doesn't really even enter into the equation, since you can just have the phone read off the information you want. There hasn't been much of a reason to hack iPhones yet — you might get a few Facebook passwords, or some contact info, but now that the phone is gaining traction in the business world, there may actually be something worth stealing on them. And it's not very hard to do. I like this quote: “I don't think any of us have ever seen encryption implemented so poorly before.”
The vulnerability lies… well, I can't tell you exactly. “A little bit of free software” is what Jonathan Zdziarski used in a demonstration for Wired, and I assume it's not being described exactly for the same reason you don't print the components of napalm in the Sunday paper. Regardless, it's a quick and easy process (involving jailbreaking and installing a SSH client) once you know how to do it, with specific data available in just a few minutes and a full disk image in under an hour. If a large business has deployed thousands of iPhones as their official device (which is certainly happening), you can bet there are trade secrets and company files on there somewhere.
Whether the risk is worth the convenience of an all-iPhone business network is up to you. But if I had my powerpoints and investors' balance sheets on a device proven to have a, shall we say, porous perimeter, I'd reassess — not that I'd ever keep my critical information on any current phone, with the possible exception of the President's. Personally, I'll stick with Sneakernet 1.0 for my highly secure data mobilization needs.
Apple's unprecedented success with the iPhone has increased their liability and their vulnerable surface area. Zdziarski isn't a black hat, so I'm sure he's talked with Apple about this, but the fact that he's going public with a serious security issue just days after the earnings call that launched a thousand posts suggests that Apple isn't taking it seriously enough.
A little update: Fellow hacker Sean Morrissey suggests:
I would use geohot's purplera1n to get access the phone which doesn't replace the OS. Then image the phone.
That means jailbreaking isn't necessary, though I don't know the specifics. He also mentions he's working on a sort of zero-impact solution for investigators — so the G-men will have a kill switch of their own. Thanks, Sean.