In this several-month old photo, leaked just before the official announcement of the iPad, you see what appears to be an iPad bolted to an Apple test bench. Everyone looked at this photo, and saw an iPad, only to have the photo's authenticity pretty much verified a few hours later when Steve Jobs showed us all an identical device on stage in Cupertino. What we missed then is what was important Sunday—a seemingly identical device as seen in the earlier pictures obscured in the corner. Shortly after this, a Chinese site called WeiPhone added more fuel to the fire by releasing photos of what appeared to be component parts of an identical device. Engadget went out on a limb, compiling the evidence, and claimed it "confirmed".

Speculation continued to run wild through Sunday and into the morning yesterday. Until, that is, Gizmodo published a story under the title "This Is Apple's Next iPhone" which pretty much put any and all speculation to rest. Especially when DaringFireball editor John Gruber wrote on his blog that he, "...called around, and I now believe this is an actual unit from Apple — a unit Apple is very interested in getting back."

The Gizmodo story was pretty much inarguable. They had the device in hand (they had presumably paid the source to acquire it) and had taken about two dozen first-party photos and a few videos of it. They had disassembled it, and it was decidedly new in design and very clearly Apple's handiwork. It had been hidden inside a custom-made case to give it the external appearance of being an iPhone 3GS. It took until about noon for (almost) all speculation to shift from whether or not the device was legitimate, to how in the hell Gizmodo managed to get it in the first place and whether or not this would spell legal jeopardy for the Gawker-owned property.

Gawker Media founder Nick Denton made no qualms about his affiliated publications engagement in "Checkbook Journalism," and posted a few unabashedly confident tweets through the day, including this gem. 

Denton went on through the day, promising that the back-story of how his publication attained the device would emerge, and that "it would be a corker".

The corker, published at 8:10PM EST, was this dubious and overly prosaic piece that significantly changed the dialog around this story. It outlined (and personally identified) an Apple Software Engineer in the iDevice QA department named Gray Powell.  The article not only surfaced Powell's Facebook profile and directly linked to his Flickr page (which, at the time, featured several remarkably high resolution Hipstamatic photos), but it cast him in a decidedly negative light—as a bumbling drunkard who, in a beer-induced haze during a birthday celebration, absent-mindedly left Apple's prized prototype alone on a barstool. It took a mere three hours for Powell to secure his social networking pages, remove Exif data from his Flickr stream (and, ultimately, remove all photos from public view), and retreat into the darkness of the internet. Shortly after the Gizmodo article ran, his individual Flickr photos were receiving over 200 views per minute.

At the same time, this article drew a picture of the discoverer of said device as an innocent bar-goer, who had a "Random Really Drunk Guy" force the phone into his hands, searched for the owner with earnest, and only discovered the secrets of the disguising case when Apple remotely bricked the phone the next morning. Gizmodo claims that their source called a bunch of numbers at Apple trying to return the device, but was only greeted with doubt and ignorance. In other words, they claim he made a valiant effort, thwarted by Apple's bureaucracy, to do the right thing before deciding to sell pictures of the device to the highest bidder.

Immediately, many who were watching the news with curiosity suddenly shifted to anger (full disclosure: myself included). There began a growing sentiment that, while Gizmodo may be entitled to take any means necessary to scoop it's competitors as a legitimate news source, and that Apple should be afforded no special protection in retaining their secrets from a hungry press, that specifically naming Powell and posting abridged transcripts of their conversations was unethical. This also led to increasing speculation as to whether the story was legitimate, the true motive of the source, and whether or not Gizmodo had acted in an unethical or potentially illegal manner in reporting the story.

Throughout all of this manic banter, one party remained atypically silent: Apple. No cease-and-decist letters were sent to Gawker or Gizmodo, nor any other publication. No warning shots were fired. Finally, at about 8:30pm California Time, Apple SVP and General Counsel Bruce Sewell sent a brief, succinct letter to Brian Lam, the Editor of Gizmodo, formally requesting the return of the device.

 

Gizmodo posted the letter under the cheeky headline "A Letter: Apple Wants It's Secret iPhone Back" shortly thereafter. The post was even more informally written and self-protective than the previous two, with Lam almost bending over backwards to insinuate how Gizmodo was operating completely within the law throughout their actions. He cited a comment from their legal team, and described his joy of being able to return the phone to Apple as  "warm, fuzzy, huggy feelings of legal compliance."

This is the story that has been reported. However, there are still rumors and speculation abound on this subject. In fact, by reading the comments on any blog covering this story, it would appear only a minority of readers are taking all of this at face value. The are a few big conspiracy theories that are still swirling in the inter-webs:

1. Apple is behind all of this—it's a well-organized viral media stunt intended to build hype for the forthcoming device and derail momentum for emerging smarphones such as the HTC Droid Incredible and the Microsoft KIN. In this scenario, Powell is a chosen character from the Apple staff, Gizmodo was handed the phone (or it was planted at the bar, purposefully) and the back-story of it's loss and ultimate recovery are fictitious works designed to stimulate the curiosity of readers.

2. Powell is the one who will take the blame for losing (or, in some particularly twisted minds, personally selling) the device, and will face the full fury of Apple's legal department. In this scenario, his life is now ruined and he's being interrogated like a Foxconn employee by Apple's Worldwide Loyalty Gestapo Team.

3. The device is a fake (or a bench "mule", a non-production form-factor used for QA testing). In this scenario, there's nothing to see here—it's either not an Apple product or Apple lost something that bares no resemblance to the final product. Move along. You've all been trolled.

None of these are true, and in the next post in this series I'll explain why these theories don't hold water. The truth, as it is appearing to me, is that the device was either lost by or stolen from Powell, and the person who sold it to Gizmodo knowingly committed a crime by doing so. Furthermore, Gizmodo either wantonly or unknowingly committed several crimes by acquiring the device and then publishing the photos and specifications of it.

For me, this is the most interesting scenario of all, and in part three, I'll explain why I think this is the case, why Apple has not taken any action yet, and what I imagine the future holds for Gizmodo (spoiler alert: it's not good).

Stay tuned.

[UPDATE: 12:42P] Gizmodo is now reporting in this article that Apple was unable to retrieve their iPhone in the few weeks leading up to the stories publication because of poor training and a technical bug in the software of the device.

First, claims Gizmodo, mid-level employees at AppleCare failed in fielding calls from the source when he was attempting to return the device because they were naturally unaware of the specifics of any prototypes, nor were ever trained to handle such a call. They actually include a "quote" (more a retelling), "allegedly" from the unnamed AppleCare Tier II support reps who fielded the very call from their source.

Secondly, Gizmodo tested the MobileMe "Find my iPhone" lo-jack feature on a build of iPhone OS4 on a 3GS device and discovered those features are currently broken, and therefore have concluded Apple would have been unable to use that service to locate and recover the device. They dutifully point out that MobileMe's remote wipe was also broken in the same build, which seems to contradict the "bricked by Apple the next morning" claim, but point out that they "apparently" used the remote wipe command in the Exchange gateway.

However, Gizmodo has not confirmed that the device they found was running the same build of iPhone OS4 that they tested with (likely the first developer seed) nor if they bothered to see if the alternate Exchange remote wipe command worked instead—an interesting question since Apple doesn't use Exchange servers, but rather utilizes their own Mail.app and iCal systems (ask any Apple employee). I suppose Gizmodo is leaving it up to us to fact-check these details. More to come, for certain.