Sept. 24 (Bloomberg) -- Apple Inc. warned iPhone users that activating their phone without using approved service providers may cause ``irreparable damage'' to the device and prevent them from adding new features.

Apple plans to release a software update for its iPhone this week that includes a new iTunes Wi-Fi music store, the Cupertino, California-based company said today in a statement.

The iPhone, a combination iPod media player and mobile phone, requires a two-year service contract from AT&T Inc. in the U.S. Some customers have used unauthorized unlocking programs that allow them to run the iPhone on other services, Apple said. That invalidates their warranty and may cause permanent damage to the $399 device.

``Since we discovered that a number of these unauthorized unlocking programs caused damage to the iPhone, we wanted to warn customers,'' Philip Schiller, Apple's vice president of product marketing, said in an interview. Apple isn't ``trying to disable iPhones that have been hacked,'' he said.

The company and AT&T, the largest mobile-phone service provider in the U.S., have sold more than 1 million iPhones since it was introduced June 29. Apple said last week that it would start selling the device in Europe through O2 Plc in the U.K., France Telecom SA's Orange wireless unit in France, and Deutsche Telekom AG's T-Mobile unit in Germany.

Apple gained $4.13, or 2.9 percent, to $148.28 at 4 p.m. in Nasdaq Stock Market trading. The stock has doubled in the past year. AT&T, up 18 percent this year, fell 26 cents to $42.27 in New York Stock Exchange composite trading.

`A Step Ahead'

Mark Siegel, a spokesman for San Antonio-based AT&T, declined to comment and referred questions to Apple.

At least three groups claimed last month to have programs that alter the iPhone to work on networks such as T-Mobile USA In. and Vodafone Group Plc. New Jersey teenager George Holz in August posted a guide on how to hack the phone on his Web site, a process that includes soldering the circuitry and modifying the gadget's software.

Apple Chief Executive Officer Steve Jobs, in London last week for the iPhone's European debut, said trying to keep hackers from unlocking products, including the copy-protection software used in the iPod, is a part of a ``constant cat-and-mouse game.''

``We try to stay a step ahead,'' Jobs, 52, said Sept. 18. ``People will try to break in and it's our job to keep them from breaking in.''

Apple had already updated the iPhone software twice before today, Schiller said. The next update will allow users to wirelessly download music from Apple's iTunes store.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: September 24, 2007 18:10 EDT