Obviously a lot has gone on with the next generation iPhone hardware fiasco since we last wrote about it. Gizmodo published a lot more of the story, including who lost the phone, the request from Apple to return it., and the AP even mentioned that Giz paid $5000 for it.

This is a lot to digest, and I think we are all still figuring out what is going on, and what is going to happen.

The situation is unprecedented. We can’t make a strong guess at what Apple will do. Apple makes great hardware and software, but a huge part of their marketing is the secrecy, the excitement, and the surprise. A post at Codulate.com today compared Steve Jobs works of wonder and amazement with Willy Wonka.

Engadget pointed out this Twitpic from TUDream

There are still questions swirling about the legitimacy of the device. In fact our most recent post questioned it. Josh and I have talked about it a little since and I think there is now very little question of the legitimacy of the device. The device came from Apple. There are a couple of arguments, and I think by now all are proven false.

1) Gizmodo is faking this. – Probably the best argument, and one we even considered here at Macgasm. However, the fact that Gizmodo’s biggest competitor, Engadget, had posted pictures of the same device before Gizmodo posted about it means Gizmodo has either established an incredibly elaborate scheme, or it really exists. Additionally, John Gruber, who few would accuse of practicing sketchy journalism, has separately confirmed that Apple is indeed missing a device, that more than just Gizmodo knew of the device, and that Gizmodo had purchased it. He referred to it as an open secret that Gizmodo had obtained the device.

2) The device is a knock off, or the person the blogs heard about it from fabricated it. – That seemed possible until Gizmodo posted the pictures and videos. The hardware is too specialized. If someone crammed an older iPhone into a funky case, there would have been a SIM card slot at the top, not a micro slot on the side. I haven’t confirmed this, but according to Gizmodo nothing exists on the market right now with micro SIM. The iPad will be the first. Not to mention lots of other stuff that is too different from prior iPhones to be one, but too Apple to be a knock off.

Image Credit Gizmodo - Click image for their article

However this brings up a good point, and one that John Gruber also mentioned: even if this is a device from Apple, it may not be exactly what the new one will look like. Apple historically keeps the hardware engineers, hardware designers, and software engineers separate. A similar concept is used in the automotive industry, called a development mule. Most new sports cars are first seen in some super ugly shell, with the new drivetrain underneath. This helps keep spy photographers from getting the design out to the public. The fact that everyone at first thought this phone was some sort of copy-cat says a lot for that possibility. The seams seen on the device lean toward this too. According to Gizmodo, the Apple employee that lost the phone was working on the Baseband Software, which handles phone functions. His test unit almost certainly had the legit hardware, and the legit software, but the design could have been totally different. The only thing that makes me really hesitant to think this is the case is the puddle of drool on my desk after going through the Gizmodo pictures yesterday. I totally believe Apple could release a radically different design for the iPhone, the current design has been used for 2 years, and is really quite similar to the first generation iPhone.

Finally, the legal and ethical issues around this are nuts. Gizmodo certainly had a choice in how they handled this. The article about the letter Apple sent tries to make Gizmodo out to be a good Samaritan, and I don’t think they have much argument for that. The initial reaction is that all is fair in journalism. Apple has a responsibility to keep secrets if they don’t want them out, and they failed. However this isn’t really how things work. Andy Ihnatko wrote a column about this if you care at all about good writing, good journalism, etc., go read it now.

Andy has been in this game a long time. Apple is an entirely different topic than it was 15 years ago, before the return of Jobs. In fact, it is a very different company than it was 7 or 8 years ago when I started following. The secrecy has been there as long as I remember, but the leaks are getting more common these days. Many, many more people care. The number of people that have either an iPhone, Macintosh computer, or iPod must be several times what it was a few years ago. This means lots of money goes through the company, and means that both the media and the financial industry care a lot more. I think Apple is also starting to play the game a bit more. There are more “leaks” from places like the Wall Street Journal, which I am certain are on purpose.

Andy goes on to tell the story of an executive that told way too much, and Andy offered to retroactively consider it off the record. I think a lot of leaks like this happen (both Engadget and John Gruber knew about this before Gizmodo posted it) but journalists have to make a judgement on what they publish. Publishing a hot scoop can generate lots of traffic and ad revenue, but it can also alienate industry contacts. Furthermore, it can alienate readers who view the actions as unethical. There are those that don’t do something because it is unethical, even if the cost benefit says it is worth losing the contacts or reader, and then there are those that just look at the cost benefit. I think this story puts Gizmodo in the latter category, along with the likes of TechCrunch.

Additionally, Gizmodo could see some serious legal fallout. There isn’t much to prove that this unit wasn’t actually stolen from Apple. The vibe at this point is that Apple considers this unit stolen. I am not a lawyer, nor do I even play one on TV, so I won’t pretend to know if there is any possible trouble. However intellectual property is a big deal. Apple is a big company, and I’m certain they’ll hire some of the best lawyers in the industry, to protect Apple from IP theft, and to protect Apple from IP suits.

The whole thing is interesting. I can even see some reason to wonder if this is some publicity stunt and Apple is behind it in the first place, but it doesn’t seem at all like their style. I think the only thing that is certain is that there are many parts to this puzzle we will never know.

What would I bet on? A higher resolution screen in the new iPhone, a move to micro SIM (SIM stuff is critical to what this engineer would have been testing), and a not entirely different interface. Expect the home button, volume buttons, silent switch, and power buttons to still be the only buttons. The front facing camera is a very strong possibility, but it also might be axed before production. I think the overall design is still in the air. I would be surprised if it looks exactly like what Gizmodo has, the seams would probably be gone if nothing else. It might be very close to the device Gizmodo obtained, or it might look like the iPhone 3GS sitting on my desk, or it might look like something we have never seen before. But I have a gut feeling that what Gizmodo has is close.

I do echo Gizmodo’s comment about Gray Powell, the engineer that reportedly lost the phone. I hope Apple goes easy on him. I don’t know him but if he graduated from NC State in 2006, we went to school together. He is probably as upset about this getting out as anyone, and not just for his own sake. I seriously doubt he would ever make a mistake like this again. It’s too bad that Apple handles these things so harshly, and that some people (*cough*journalists*cough*) value getting a story over the fallout it could have for an individual.

I’ll give you a parting DF link and prediction. John Gruber also linked to this picture of Steve Jobs office, which brings about a final prediction that we might not see a new iPhone at all for 2010. If the pictures Gizmodo posted are the final design, Jobs might be so pissed off to axe the entire project, and if he doesn’t we will certainly hear a smarmy comment during his keynote.

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