In simple terms, a “locked” device has certain mechanisms so only a specific cellular carrier’s service will allow it to operate. In other words, it will only work with that carrier. Carriers like AT&T and T-Mobile use GSM technology that requires a “SIM Card” that slides into the phone to identify the service. Carriers like Verizon and Sprint utilize different technology that does not require a SIM card, but devices intended for their networks are typically “locked” nonetheless. Either way, a phone is typically “locked” to the service of a particular carrier. Carriers normally require using a “locked” device if they are going to provide a subsidy (or “discount”) in exchange for a consumer service contract (typically a 2-year contract term). Once the device is “locked”, which is typically done in the factory, it is locked regardless of whether a service contract was sold with the device or not. Even if a “locked” device is sold at full price (often termed “unactivated” at point of sale) it will only work with the locked carrier.
So in summary:
“Locked” means the device will only accept SIM card from the designed carrier. This could be sold with or without a contact (full price). Consumers normally would prefer “unlocked” if they pay full price, but some carriers require all devices to be locked regardless of whether a contact was sold.
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