This article explains what an IPSW file is, the different ways you can use it, and how to install it on your device.
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A file with the IPSW file extension is a software update file used with iPhone, iPod touch, iPad, and Apple TV. It is an archive file format that stores encrypted DMG files and several others such as PLISTs, BBFWs, and IM4Ps.
IPSW files are released by Apple and are intended to add new features and patch security vulnerabilities in compatible devices. They can also be used to restore an Apple device to its factory settings.
When a compatible device connected to a computer requires an update, an IPSW file can be automatically downloaded via iTunes after accepting a prompt to update the device. iTunes will then install the file on the device.