How Apple Lost The Next iPhone

The Gourmet Haus Staudt. A nice place to enjoy good German beer. And if you are an Apple Software Engineer named Gray Powell and you get one too many beers, it's also a nice place to lose the next-generation iPhone.

The 27-year-old Powell - a North Carolina State University 2006 graduate and talented amateur photographer - is an Apple Software Engineer working on the iPhone Baseband Software, the little program that enables the iPhone to make calls.

On the night of March 18, he was enjoying the fine imported ales at Gourmet Haus Staudt, a nice German beer garden in Redwood City, California. He was happy. The place was great. The beer was excellent. "I underestimated how good German beer is," he typed into the next-generation iPhone he was testing on the field, cleverly disguised as an iPhone 3GS. It was his last Facebook update from the secret iPhone. It was the last time he ever saw the iPhone, right before he abandoned it on bar stool, leaving to go home.

Knowing how ferocious and ruthless Apple is about product leaks, those beers may have turned out to be the bitterest of his life.

(Almost) Impenetrable Security

Until now, Apple's legendary security has always worked perfectly. Perhaps there was a blurry factory photo here, or some last-minute information strategically whispered to some friendly media there. But when it comes to the big stuff, everything is airtight. At their Cupertino campus, any gadget or computer that is worth protecting is behind armoured doors, with security locks with codes that change every few minutes. Prototypes are bolted to desks. Hidden in these labs, hardware, software and industrial-design elves toil separately on the same devices, without really having the complete picture of the final product.

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 defence 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 lose control 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.

Lost and Found

Apple security's mighty walls fell on the midnight of Thursday, March 18. At that time, Powell was at Gourmet Haus Staudt, just 32km from the company's Infinite Loop headquarters, having his fun. Around him, other groups of people were sharing the jolly atmosphere, and plenty of the golden liquid.

The person who eventually ended up with the lost iPhone was sitting next to Powell. He was drinking with a friend too. He noticed Powell on the stool next to him but didn't think twice about him at the time. Not until Powell had already left the bar, and a random really drunk guy - who'd been sitting on the other side of Powell - returned from the bathroom to his own stool.

The Random Really Drunk Guy pointed at the iPhone sitting on the stool, the precious prototype left by the young Apple engineer.

"Hey man, is that your iPhone?" asked Random Really Drunk Guy.

"Hmmm, what?" replied the person who ended up with the iPhone. "No, no, it isn't mine."

"Ooooh, I guess it's your friend's then," referring to a friend who at the time was in the bathroom. "Here, take it," said the Random Really Drunk Guy, handing it to him. "You don't want to lose it." After that, the Random Really Drunk Guy also left the bar.

The person who ended up with the iPhone asked around, but nobody claimed it. He thought about that young guy sitting next to him, so he and his friend stayed there for some time, waiting. Powell never came back.

During that time, he played with it. It seemed like a normal iPhone. "I thought it was just an iPhone 3GS," he told me in a telephone interview. "It just looked like one. I tried the camera, but it crashed three times." The iPhone didn't seem to have any special features, just two bar codes stuck on its back: 8800601pex1 and N90_DVT_GE4X_0493. Next to the volume keys there was another sticker: iPhone SWE-L200221. Apart from that, just six pages of applications. One of them was Facebook. And there, on the Facebook screen, was the Apple engineer, Gray Powell.

Thinking about returning the phone the next day, he left. When he woke up after the hazy night, the phone was dead. Bricked remotely, through MobileMe, the service Apple provides to track and wipe out lost iPhones. It was only then that he realised that there was something strange that iPhone. The exterior didn't feel right and there was a camera on the front. After tinkering with it, he managed to open the fake 3GS.

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

The Aftermath

Weeks later, Gizmodo got it. It was the real thing. Once we saw it inside and out, there was no doubt about it. We learnt about this story, but we didn't know for sure it was Powell's phone until today, when we contacted him:

Gray Powell: Hello?

John Herrman: Is this Gray?

G: Yeah.

J: Hi, this is John Herrman from

G: Hey!

J: You work at Apple, right?

G: Um, I mean I can't really talk too much right now.

J: I understand. We have a device, and we think that maybe you misplaced it at a bar, and we would like to give it back.

G: Yeah, I forwarded your email [asking him if it was his iPhone] , someone should be contacting you.

J: OK.

G: Can I send this phone number along?

J: [Contact information]

He sounded tired and broken. But at least he's alive.

Unlike Apple's legendary impenetrable security, breached by the power of German beer and one single human mistake.

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



    That has to go on Wikipedia as the description of Epic Fail. People will then have a good reference for the term "Epic Fail"

    Just me, but I would neither play with someone else's phone nor would I take it home with me if it was in a place like a restuarant etc. would just hand it over the bar.

      Agreed. To me I'd imagine Apple has a right to get on both Giz and the guy who "found" the phone and hold them liable for the leak. To be honest it would have been better for Gray if this article had not been published as it only serves to harm him. Not really a worthwhile gain for anyone really.

        "Not really a worthwhile gain for anyone really."


    Poor, poor bastard. I imagine he's being absolutely crucified internally at Apple.

    Nice looking phone though, I'm looking forward to the camera catching up to the one on my N95 from 3 years ago.

    And rather than do the right thing straight away, you may have cost him his job. So much for journalistic integrity.

    Giz has made it into the news on this one ... although Apple are now apparently claiming Giz *stole* the phone:

    This is utter rubbish! The phone was planted!

    "At least he's alive" Hahaha. But for the next week he'll be waking up with decapitated animals in his bed. Then one day, he'll just... stop tweeting.

      hahaha, comment of the century!

    Little confused here. He'd already identified an owner then decided to onsell the device anyhow? Did Giz. buy the device knowing the original owner had already been identified already? Has to be a bit shady legally with regards to misplaced / lost goods and such.

    So, are you going to return it?

    This will be forever referenced in line with periods of forgetfulness as having a 'Gray moment'...

    Why was it necessary for Gizmodo to post the engineer's name? What about ethics or just plain decency? Once you've got the story, why ruin this guy's life? or perhaps he might actually become a celebrity ... this world is crazy and unethical.

    Who cares about the iphone...i'm more interested to see what happens with Gray/Apple/Giz etc

    Surprise. Dude is sipping from a JD hip-flask in that top shot. Article states he was drunk when he lost it. Not the kind of cat you want your valuable IP sitting with. NDA's do not protect against stupidity/human error/loose lips...

      Having previously worked for a company that makes high end mobile phones: the staff are encouraged to use prototype handsets before release as their personal mobiles, but only after a certain point in development - like once field test begins (before that they are under lock and key and are generally very flaky hardware)

    Wow. Im either extremely naive, or you guys are incredibly gullible. If the guy that found that phones story can be believed, especially the part about the random guy telling him to keep the phone "cause it must be his or his friends" then this has to go down as the BIGGEST SET-UP in history.

    And you folks are eating it right up.

    Om nom nom. Need a napkin?

      Congratulations Gray and "Random Really Drunk Guy". You have done your acting jobs well and fooled Gizmodo with your antics.

    This whole episode just seems like piss poor form to me. And naming the poor bloke takes it down another level of wrong.

    Naming and picturing the guy is a straight violation of the SPJ's code of ethics. He is a private citizen.

    Interesting, until a day or 2 ago. The only phone tech news you would hear about was regarding Android or Windows Phone. After seeing the OS4 update for iPhone, I had all but decided to switch from Apple. Now this accidental leak and I am reconsidering. Major internet buzz to Apple. I think if this guy gets fired over it, it was accidental. If he is reprimanded but keeps his job, then it's Apple's marketing team who deserve a bonus. You can't buy this sort of publicity.

    Thing is though, Apple have been extremely good, beyond extremely good, at not letting things out in the past. And now they let a fairly junior staffer head off to a bar with one? Would very junior staff have evening take-home privileges for this particular level of prototype/almost production-ready device?

    LOL so is anyone buying this?

      If you guy by the level of soap-boxing happening in this thread, yeah, plenty of people are buying it.

      Front page news around the world. Yes. Millions are buying it.

      Nick, can you tell us what the spike in hits has been like for Gizmodo over the last 24 hours? I bet it's going nuts. Well done!

    In common law countries, it is an offence to "steal by finding" - Apple is right. You have also knowingly received stolen goods, and your ad revenue is the fruit of a poisoned tree. You guys are hosed :-)

      Maybe not:

        to quote the link 'California the law states, “If it is lost, the owner has three years to reclaim or title passes to the owner of the premises where the property was found. The person who found it had the duty to report it.”' - the key bit is the last part - you must hand it in ASAP, or you have stolen it. Giz knew who it belonged to, paid for it, and pulled it to bits. Apple will probably play nice for PR reasons, but the legal/ethical line was well and truely crossed here.


    This is so low.

      Tainting someone's identity is not a proud moment.

    I don't believe this phone was left in a bar "by accident". It's just the next level of counterespionage. We all think we now have "proof" from Apple that this is the 4g phone.

    But we don't really know.. . .

    Spooky, really. . . .


      Or maybe just some very clever marketing on the part of those people at Apple.

      Who wants to place a $ value on the attention that the next iPhone has garnered through this episode? How many zeroes was that?

    Well,what can i say, "zee zermans" they are the best in everything they do, wage wars, make beers etc etc.
    They are the best.

    A little persistence in contacting apple and the guy who found this would have made way more money then what gizmodo paid him.

    It looks like a nice place to have a drink LOL.

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