Apple 2.0

Covering the business that Steve Jobs built

Apple wants its secret iPhone back

April 20, 2010: 7:05 AM ET

The end of the cloak-and-dagger tale of a lost or stolen prototype

Photo: Gizmodo

Now that most of the pieces are in place, the story turns out to be pretty straightforward.

On March 18, a young Apple (AAPL) engineer had a few too many drinks at a beer garden in Redwood City, Calif., and left his cellphone behind on a bar stool. A customer picked it up, saw that it looked like an iPhone, located the Facebook app and found the owner's profile page (since removed). According to this customer, he tried to contact Apple but all he got for his trouble was a case number. By the next morning, the phone was dead -- disabled remotely.

Meanwhile, he's looked more closely at the device and discovered that underneath what looks like an ordinary iPhone is something quite different. For one thing, it has two cameras -- one on the front and one on the back. He breaks open the outer case and finds the device shown at right.

This is where the story gets a little shady.

Realizing he's got something of value, our unnamed beer garden patron takes a few photographs and starts shopping them around. He shows the pictures to Engadget and offers to let them play with the device for an unnamed price. On April 17, nearly a month after the phone was lost, Engadget runs the photos -- immediately setting off a frenzy of rumors and counter rumors. Was it Apple's next-generation iPhone, a prototype or a total fake? Was it a cheap Asian knock-off? Was the cheap Asian knock-off story itself a fake?

Meanwhile, Engadget's rival Gizmodo has bought the thing outright. Gizmodo's owner, Nick Denton, has no problem with checkbook journalism, and he has confirmed to the New York Times that Gizmodo paid $5,000 for the device.

Gizmodo plays the story for all its worth. It takes more photos. It makes some videos. It publishes the specs. It cracks the thing open and photographs its innards. It visits the beer garden. It calls the original owner, records the interview and publishes his name and Facebook photo.

Gizmodo's servers slow to a crawl under the weight of all the Web traffic. According to paidContent, just one of its posts generated more than 3.7 million page views, over 28,000 tweets and more than 1,870 comments.

And then someone from Apple calls Gizmodo -- according to one rumor, it was Steve Jobs himself. Apple wants its phone back. From the company's point of view, as Daring Fireball's John Gruber keeps reminding readers, lost property not promptly returned to its owner could be considered stolen. And paying for stolen property, in California and elsewhere, is a crime.

Gizmodo asked for a request in writing, and on Monday it got it, signed by Apple's general counsel Bruce Sewell:

"It has come to our attention that Gizmodo is currently in possession of a device that belongs to Apple. This letter constitutes a formal request that you return the device to Apple. Please let me know where to pick up the unit."

To which Gizmodo's Brian Lam replied:

"Happy to have you pick this thing up. Was burning a hole in our pockets. Just so you know, we didn't know this was stolen when we bought it. Now that we definitely know it's not some knockoff, and it really is Apple's, I'm happy to see it returned to its rightful owner.

P.S. I hope you take it easy on the kid who lost it. I don't think he loves anything more than Apple."

The only important question that remains is how closely this prototype resembles the final product Apple is expected to release this summer. For that we will have to wait.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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