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When  reported on the next-generation iPhone that had come into its hands, I was as curious as the next geek about what they’d found. But I didn’t think the ends justified the means.

The story begins,

You are looking at Apple’s next iPhone. It was found lost in a bar in Redwood City, camouflaged to look like an iPhone 3GS. We got it. We disassembled it. It’s the real thing, and here are all the details.

“We got it,” they said. How?

There was much speculation about that, but obviously — if the phone was a real prototype — it must have been lost by an Apple employee. That’s why I tweeted, “Some employee is in very deep shit for letting this happen:” But others wondered. Was it planted by Apple? That’s what, for example, Howard Stern guessed on his show yesterday morning. He thought it was a brilliant marketing move by Apple.

But Gizmodo set their record straight, through a much-updated piece titled How Apple lost the next iPhone. After telling the story, at length, of how Gray Powell, an Apple employee, had left it at a restaurant (“The Gourmet Haus Staudt. A nice place to enjoy good German lagers”), Gizmodo unpacks the means by which the phone came into their possession:

There it was, a shiny thing, completely different from everything that came before.

He reached for a phone and called a lot of Apple numbers and tried to find someone who was at least willing to transfer his call to the right person, but no luck. No one took him seriously and all he got for his troubles was a ticket number.

He thought that eventually the ticket would move up high enough and that he would receive a call back, but his phone never rang. What should he be expected to do then? Walk into an Apple store and give the shiny, new device to a 20-year-old who might just end up selling it on eBay?
The Aftermath
Weeks later, Gizmodo got it for $5,000 in cash. At the time, we didn’t know if it was the real thing or not. It didn’t even get past the Apple logo screen. Once we saw it inside and out, however, there was no doubt about it. It was the real thing, so we started to work on documenting it before returning it to Apple. We had the phone, but we didn’t know the owner. Later, we learnt about this story, but we didn’t know for sure it was Powell’s phone until today, when we contacted him via his phone.

The apparent purpose of the story is to save Gary Powell’s ass, as well as to cover some of Gizmodo’s as well. It concludes,

He sounded tired and broken. But at least he’s alive, and apparently may still be working at Apple—as he should be. After all, it’s just a stupid iPhone and mistakes can happen to everyone—Gray Powell, Phil Schiller, you, me, and Steve Jobs.

The only real mistake would be to fire Gray in the name of Apple’s legendary impenetrable security, breached by the power of German beer and one single human error.

Additional reporting by John Herrman; extra thanks to Kyle VanHemert, Matt Buchanan, and Arianna Reiche

Update 2: I have added the bit on the $5,000 (in italics) and how we acquired the iPhone, as Gawker has disclosed to every media outlet that asked.

Yesterday the New York Times ran iPhonegate: Lost, Stolen Or A Conspiracy?, by Nick Bilton. The gist:

One big question is how much Gizmodo paid for the phone, and whether keeping it was legal. Nick Denton, chief executive of Gawker Media, which owns Gizmodo, told The Times the site paid $5,000 for the phone. But still bloggers wondered if it had really paid $10,000.

On Monday, Charles Arthur, Technology blogger for The Guardian, said paying for the phone could mean that Gizmodo was knowingly receiving stolen goods; on Tuesday, citing the Economic Espionage Act of 1996, Mr. Arthur expanded on his theory.

This helped the debate move on to more serious matters: whether the phone was “lost,” or “stolen.” John Gruber, blogger for Daring Fireball, pointed outthat in the eyes of  California law, there isn’t a difference. The law states:

One who finds lost property under circumstances which give him knowledge of or means of inquiry as to the true owner, and who appropriates such property to his own use, or to the use of another person not entitled thereto, without first making reasonable and just efforts to find the owner and to restore the property to him, is guilty of theft.

The next big question — whether Gizmodo would turn over the phone to Apple — was answered after a long day of speculation on Monday over itsauthenticity.  Gizmodo has reported that it received a letter from Apple’s legal counsel…

Gizmodo complied and returned the phone. Yesterday I tweeted, “Re: If you found a next-gen iPhone, would you return it — or use it to pull the owner’s pants down?” Thus far, two responses:

Of course, what Gizmodo did was an example of investigative journalism at work. Mainstream journals and broadcasters sometimes pay for stories, leads, video and audio recordings, photographs. That’s not unusual. But, as Charles Arthur writes, “As a reporter – and make no doubt, Gizmodo is reporting here, actually doing journalism red in tooth and claw – you inevitably end up walking close to the edge of what’s legal every now and then. Whether it’s being in receipt of confidential information, publishing something that’s potentially defamatory, or standing closer to the front line of a protest than the police would like, you occasionally have to put yourself in some legally-risky positions.”

Many thousands of years ago on the time scale of both the Internet and journalistic practices, specifically in 1971, I wrote a story for a New Jersey newspaper about rural poverty, illustrated by a photo I took of somebody’s snow-covered yard filled with discarded appliances and half-disassembled old cars sitting on cinder blocks. I thought at the time that the photo was sufficiently generic to protect the anonymity of the home’s occupier. I was wrong. The owner called me up and let me have it. I was still a kid myself — just 22 years old — and it was a lesson that stuck with me.

A couple decades later that lesson was enlarged by “Notes Toward a Journalism of Consciousness,” by D. Patrick Miller, in The Sun, a magazine for which I had once been a regular contributor. (No links to the story, but its table of contents is here.) In it Miller recalled his work as an investigative reporter in the Bay Area, and how sometimes he had to cross a moral line. In his case it was gaining the confidence of sources he would later, in some ways, betray — for the Greater Good of the story’s own moral purposes.

Gizmodo poses the moral goodness of its own story against the backdrop of Apple’s fanatical secrecy:

And hidden in every corner, the Apple secret police, a team of people with a single mission: To make sure nobody speaks. And if there’s a leak, hunt down the traitor, and escort him out of the building. Using lockdowns and other fear tactics, these men in black are the last line of defense against any sneaky eyes. The Gran Jefe Steve trusts them to avoid Apple’s worst nightmare: The leak of a strategic product that could cost them millions of dollars in free marketing promotion. One that would make them losecontrol of the product news cycle.

But the fact is that there’s no perfect security. Not when humans are involved. Humans that can lose things. You know, like the next generation iPhone.

Thus the second wrong makes a write, but not a right.

Two years ago, in this post here, I wrote,

Still, I think distinctions matter. There is a difference in kind between writing to produce understanding and writing to produce money, even when they overlap. There are matters of purpose to consider, and how one drives (or even corrupts) the other.

Two additional points.

One is about chilling out. Blogging doesn’t need to be a race. Really.

The other is about scoops. They’re overrated. Winning in too many cases is a badge of self-satisfaction one pins on oneself. I submit that’s true even if Memeorandum or Digg pins it on you first. In the larger scheme of things, even if the larger scheme is making money, it doesn’t matter as much as it might seem at the time.

What really matters is … Well, you decide.

Gizmodo was acting in character here. That character is traditional journalism itself, which is no stranger to moral compromises.

I’m not saying that one must not sometimes make those compromises. We all often do, regardless of our professions. What makes journalism a special case is its own moral calling.

How high a calling is it to expose the innards of an iPhone prototype?

To help decide, I recommend the movie Absence of Malice.

Was malice absent in Gizmodo’s case? And, even if it was, is the story worth what it cost to everybody else involved — including whatever dollar amount Gizmodo paid to its source?

I submit that it wasn’t. But then, I’m not in Gizmodo’s business. I also don’t think that business is journalism of the sort we continue to idealize, even though journalism never has been as ideal as we veterans of the trade like to think it is.

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In response to Dave‘s Reading tea leaves in advance of Apple’s announcements, I added this comment:

Steve loves to uncork constipated categories with the world’s slickest laxative. So I’m guessing this new box will expand Apple’s retail shelf space to include newspapers, journals and books as well as sound recordings, movies and TV shows. It will be the best showcase “content” ever had, and will be a wholly owned proprietary channel. A year from now, half the people on planes will be watching these things.

It would be cool if it also helped any of us to become movie producers, and to share and mash up our own HD creations. But I think Steve is more interested in hacking Hollywood (entertainment) and New York (publishing).

I’ve thought for years that Apple’s real enemy is Sony. Or vice versa. But Sony got lame, becoming a Hollywood company with an equipment maker on the side. So think instead of the old Sony — the inventive one that owned the high-gloss/high-margin end of the entertainment gear business, the Sony of Walkmen and Trinitrons. That’s the vacuum Apple’s filling. Only, unlike Sony, Apple won’t have 50,000 SKUs to throw like spaghetti at the market’s wall. They’ll have the fewest number of SKUs possible. And will continue to invent or expand whole new categories with each.

And there will be something missing to piss people off too. Maybe it’ll be absent ports (like you said). Maybe it’s no multi-tasking, or skimpy memory, or bad battery life, or an unholy deal with some “partner.”

Whatever it is, the verities persist. Meaning items 1 through 6 from this 1997 document still apply:…

At that last link I wrote,

These things I can guarantee about whatever Apple makes from this point forward:

  1. It will be original.
  2. It will be innovative.
  3. It will be exclusive.
  4. It will be expensive.
  5. It’s aesthetics will be impeccable.
  6. The influence of developers, even influential developers like you, will be minimal. The influence of customers and users will be held in even higher contempt.

So now the iPad has been announced, Steve has left the building, and the commentariat is weighing in.

The absence of multi-tasking might be the biggest bummer. (Makes me wonder if mono-tasking is a Jobsian “feature”, kinda like the one-button mouse.) Adam Frucci of Gizmodo lists mono-tasking among eight things that suck” about the iPad, including no cameras, no HDMI out, no Flash, 3×4 (rather than wide) screen and a “Big, Ugly Bezel”. (That last one is off base, methinks. You need the wide bezel so you can hold the device without your hot fingertips doing wrong things with the touchscreen.)

Elswehere at Gizmodo, Joel Johnson says “PCs will be around as expert devices for the long haul, but it’s clear that Apple, coasting on the deserved success of the iPhone, sees simple, closed internet devices as the future of computing. (Or at the very least, portable computing.) And for the average consumer, it could be.”

The Engadgeteers mostly panned it. Unimaginative… underwhelming… one of Apple’s biggest misses.

MG Sigler at Techcrunch says, “The thing is beautiful and fast. Really fast. If you’ll excuse my hyperbole, it felt like I was holding the future. But is it a must-have?” Then answers,

Most people won’t yet, but as long as Apple has its base that will buy and use the iPad, they have plenty of time for either themselves or third-party developers to create the killer uses that make the iPad a must-have product for a broader range of people. We already saw that happen with the App Store and the iPhone/iPod touch. And at $499 (for the low-end version), there will be no shortage of people willing to splurge on the device just to see what all the fuss is about. They’ll get hooked too.

That’s getting close, but it’s not quite there.

First, the base Apple wants is consumers. Literally. We’re talking newspaper and magazine readers, buyers and users of cameras and camcorders, and (especially) TV and movie watchers. To some degree these people produce (mostly home video and photos), but to a greater degree they are still potatoes that metablolize “content”. This thing is priced like a television, with many improvements on the original. Call it Apple’s Trinitron. They are, like I said, after Sony’s abandoned position here, without the burden of a zillion SKUs.

Second, there will be a mountain of apps for this thing, and more than a few killer ones.

What depressed me, though I expected it, was the big pile of what are clearly verticalized Apple apps, which I am sure enjoy privileged positions in the iPad’s app portfolio, no matter how big that gets. It’s full of customer lock-in. I’m a photographer, and the only use for iPhoto I have is getting shots off the iPhone. Apple’s calendar on the iPhone and computer (iCal) is, while useful, still lame. Maybe it’ll be better on the iPad, but I doubt it. And the hugely sphinctered iTunes/Store system also remains irritating, though I understand why Apple does it.

What you have to appreciate, even admire, is how well Apple plays the vertical game. It’s really amazing.

What you also have to appreciate is how much we also need the horizontal one. The iPad needs an open alternative, soon. There should be for the iPad what Google’s Nexus One is for the iPhone.

I got a ride home tonight from Bob Frankston, who was guided by a Nexus One, serving as a better GPS than my dashboard’s Garmin. Earlier in the evening Bob used the Nexus One to do a bunch of other stuff the iPhone doesn’t do as well, if at all. More importantly, he didn’t need to get his apps only from Google’s (or anybody’s) “store”. And if somebody else wants to make a better Android phone than this one, they can. And Google, I’m sure, hopes they do. That’s because Google is playing a horizontal game here, broadening the new market that Apple pioneered with its highly vertical iPhone.

So a big lesson here is that the market’s ecosystem includes both the vertical silos and the horizontal landscapes on which those silos stand, and where all kinds of other things can grow. Joel may be right that “the average consumer” will have no trouble being locked inside Apple’s silo of “simple, closed Internet devices”. But there are plenty of other people who are neither average nor content with that prospect. There are also plenty of developers who prefer independence to dependence, and a free market to a captive one.

Captivity has its charms, and an argument can be made that tech categories are best pioneered by companies like Apple and Sony, which succeed both by inventing new stuff that primes the pump of demand, and by locking both developers and customers inside their silos. But truly free markets are not restricted to choices among silos, no matter how cushy the accomodations may be. Nor are they restricted to the non-choice of just one silo, as is currently the case with the iPad. Free markets are wide open spaces where anybody can make — and buy — anything.

There’s more to fear from heights than widths.

Bonus link: Dave weighs in. This is just a jumbo Oreo cookie.

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