Steve Jobs’ Worst Nightmare Comes True

By Mike Schuster  APR 20, 2010 2:00 PM

A drunken Apple employee leaves an iPhone prototype in a bar after a few too many.


Way to go, Gizmodo! You're the winners of one of the greatest product leaks of all time. For a paltry $5,000, you've purchased an exclusive sneak peek at a coveted device, a torrent of publicity, and a heap of solace to Apple (AAPL) fans -- proving, yes, the next iPhone will be better than the last.

And as for Android (GOOG), BlackBerry (RIMM), and future Windows Phone 7 (MSFT) users, they're probably just happy to see Steve Jobs squirm.

The tale began one month ago in a German beer garden in Redwood City, California. Apple software engineer Gray Powell was enjoying the establishment's fine selection and was field-testing the company's device in the meantime. Gizmodo reported Powell's last Facebook message posted from the smartphone was "I underestimated how good German beer is." Sometime after midnight, Powell left the bar and, in doing so, carelessly left the prototype to Apple's next multimillion-dollar product sitting on a bar stool.

The man adjacent to the stool -- the anonymous person who eventually provided the iPhone to Gizmodo -- was alerted to its presence by a passerby, who recommended he return it to his "friend." After asking the bar patrons if it was theirs, he noticed Powell's name in his Facebook app and planned on returning the smartphone the next day.

But once he tinkered around with the device, he discovered it wasn't like any iPhone currently available. The following morning -- after Powell or Apple remotely disabled the phone -- the Gizmodo source noticed a plastic shell which disguised the actual exterior of the phone, making it appear like a regular 3GS model. The phone featured a straight metallic edge, not a smooth bevel, and a front-facing camera was a strong tip-off that this was something different.

The source called Apple to report the missing device, but no one was willing to take either his call or him seriously. Even Redwood City police couldn't find records of a stolen or lost iPhone, according to the Los Angeles Times. After weeks of no callback, the owner of the iPhone prototype contacted Gizmodo and sold it to them for $5,000.

Naturally, having heard thousands of unsubstantiated rumors and tips, Gizmodo was skeptical that they were holding Apple's next iPhone. But once they experimented with the device -- despite it being remotely "bricked" -- they concluded it was the real deal. Their computers recognized it as an iPhone, its next-generation OS 4.0 couldn't be updated with existing firmware, and its guts -- clearly designed for the updated case -- were clear-cut proof this was an Apple prototype.

Among the new features: front-facing camera, a larger battery, a Micro-SIM slot, a camera flash, a possible noise-cancellation mic, improved display, and split buttons for the volume. Its metallic edge is also reflected in the button style.

Once Gizmodo was sure this was indeed Powell's prototype, they phoned him and Powell replied "someone should be contacting you." There's still no word if Powell received both barrels from Steve and his top brass or if Powell was let go for his mistake.

Sure enough, Apple did contact Gizmodo and formally requested the device -- lending further proof that this was the real deal. The letter read:

"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."

And in compliance with the law, Gizmodo did return the iPhone.

But the question remains: Is this the actual design of the final iPhone product set to debut in the summer? For all we know, it's just one of many designs Apple is currently field testing before choosing what will be the final product. However, CNet editor Brian Tong discussed the matter with Good Morning America, saying "Now this may not be the final design, but the hardware, the look, the feel, the fact that they built a fake case to make it look like the earlier iPhone, that says a lot."

We won't know for sure until Steve hits center stage in June, and maybe then, his blood pressure will have dropped after this leak fiasco dies down. But in the meantime, it'll be an awfully frosty spring in Cupertino.

Tong said, "I don't know what Steve Jobs does when he loses control. I don't want to be around him right now."
No positions in stocks mentioned.