Buzz still exists over iPhone reveal

SAN JOSE, Calif. —As it gears up to unveil what's widely expected to be a new iPhone at a conference in June, Apple, a company famous for building buzz by keeping everything under lock and key, must be wondering: Will some of the thrill be gone?

Stung last week by the very public outing of what's believed to be its next-generation iPhone, Apple declined to comment for this report. But as investigations by law enforcement and an internal Apple probe continue to try to figure out how the lost or stolen prototype iPhone ended up in the hands of tech blog Gizmodo, Apple observers and former employees were busily dissecting this latest bite of Apple lore.

"I don't think this'll hurt Apple one bit," said Gartner Research analyst Ken Dulaney. "Some people are saying the whole thing was a plant by Apple, but regardless of what happened, this is nothing but part of an incredibly intelligent public relations campaign. In the end, any news is good news."

Apple has historically used its Worldwide Developers Conference as a launchpad for new products. It announced new iPhones at shows in 2008 and 2009, and there is widespread speculation that a new iPhone will be unveiled at this conference, which Apple said Wednesday will start June 7 in San Francisco.

But this time, a bit of skulduggery has complicated matters. The tech community is still beside itself over Gizmodo's publication of new features on a lost iPhone prototype, reportedly left in a Redwood City, Calif., bar by Apple engineer Gray Powell, recovered by someone and then sold to Gizmodo.

Won't the leak take some of the air out of the upcoming show? And are Apple's competitors popping the cork over this embarrassing breach in security at the Cupertino, Calif., tech giant?

"Apple's competitors," Dulaney said, "shouldn't be salivating over this. Apple fans will still be lining up and spending even more of their money on the next iPhone."

As analyst Bonny Joy, with Boston-based Strategy Analytics, points out, a new iPhone's hardware does not necessarily an iPhone make.

"There will not be any lack of excitement at the show simply because the prototype is known," he said. "It's been widely expected that a new generation was coming. And what was left in the bar was only a piece of hardware. So there may be even more excitement now, because people love drama. It's as if they got a tease and now they want to see more."

Experts say the brouhaha over Gizmodo is beside the point, the point being the updated wizardry fans are expecting to find inside the fourth-generation iPhone. Joy said, "assuming the next-generation iPhone has better processing power and perhaps new video features, that will really drive the replacement market. Sales could do really well."

Still, the incident appears to have been an egregious breach of the secrecy that has been an integral part of the corporate culture, at least since CEO Steve Jobs returned in the mid-1990s. Apple makes a point of stressing to new employees the importance of keeping information about its products and operations secret.

The company has, in some cases, gone to great lengths to guard information about its products and other things. For example, it often files trademarks for new products overseas before it files them in the United States, where they might be more easily found and published. In the middle of the past decade, it sued blog site Think Secret, seeking to block it from publishing information about unreleased products. After a multiyear legal battle, Think Secret's publisher agreed to shut down the site.

Inside the company, secrecy reigns supreme. One former worker said that some employees are not simply prohibited from talking with people outside Apple about what they're working on —"A friend of mine in Apple marketing wasn't even allowed to talk about her work to people sitting right next to her," said the former worker. "You can extrapolate that if Apple is that secretive with day-to-day stuff, then this iPhone incident must have really rocked the company like crazy. Everyone's probably thankful they weren't the guy who lost the phone in the first place."