Police in Silicon Valley have launched an investigation into the lost iPhone prototype that made its way in to the hands of Gizmodo, CNET reported late Friday. Law enforcement officials told the site that criminal laws may have been broken as a result of the transaction, but did not provide much more in the way of detail.

CNET’s source claimed that Apple had been contacted, and it was thought that a computer crime task force from Santa Clara County (where Apple is headquartered) was heading up the investigation. Everything is preliminary, and the investigation will only see if enough evidence exists to press charges.

It is not known if the investigation directly targets Gizmodo, the person who found the device, or both. Some legal analysts have said in the least that Apple may have a case against the prototype’s finder, and possibly Gizmodo as well depending on the facts.

Pressing charges against the site may not be as straightforward as some think: as I wrote Tuesday Apple does share some culpability in the matter, and due to First Amendment issues and past Supreme Court decisions, it’s much harder to criminally prosecute the press for leaks.

However, those cases did not deal with confidential information obtained in the manner that Gizmodo did, so it’s unclear how much those decisions would apply here.

I’ll admit that I have lusted after Mophie’s Juice Pack Air, especially considering I can somehow go through my battery power on my iPhone 3GS in a matter of a half a day or so. The only problem I’ve had is the bulk: it ads about 3 ounces of weight, and another half inch or so of bulk, bringing it up to a somewhat chunky 3/4″ in height.

Enter Mili and its recently released Power Skin. While its power ratings (at least advertised) are slightly less than the Mophie, the case measures in at 18 millimeters, a hair smaller than its competitor at about .7 inches. Like its competitor, the skin comes in different color combinations: black or white on the outside, and either white, silver, black, orange, blue, or green on the inside.

Mili says it has gotten the product Apple certified to work with either the 3G or 3GS. At a price of $69.95, it’s also $10 cheaper than the Mophie.

Is such a small difference in bulk going to be noticeable? Until I get one in my hands, I won’t be able to say. But it is nice to see manufacturers attempting to deal with the greatest drawbacks of these cases.

The white flag is being raised by Adobe in its latest battle with Apple, which could spell the end of the companies attempts to bring Flash to the iPhone overall. The company said that it will no longer persue the ability to allow developers to create Flash apps intended for the iPhone/iPad, pointing to Apple’s chokehold over development for the platform.

“As developers for the iPhone have learned, if you want to develop for the iPhone you have to be prepared for Apple to reject or restrict your development at anytime, and for seemingly any reason,” Flash product manager Mike Chambers wrote on his blog Tuesday.

Chambers continued by all but saying Adobe’s efforts had caught Apple in a lie, proving that Flash could work on the iPhone. He also said the company would now focus its efforts on competing operating systems like Android.

Working with Google could also get Apple’s goat considering the two companies’ relationship has soured considerably over the past year. Android is an open platform, and Google has not done much (if anything) to exert control over who is developing for it.

“We are at the beginning of a significant change in the industry, and I believe that ultimately open platforms will win out over the type of closed, locked down platform that Apple is trying to create,” he wrote.

I’d now venture to guess that we’ve come to the end of the line when it comes to Flash on the iPhone period. It may not matter much now however, considering the dramatic uptick in use of HTML 5. That said, many major websites still do not support HTML 5 fully, so iPhone and iPad users will contine to have a broken experience when it comes to the Web.

Who does that benefit — Apple’s own interests, or the interests of its growing customer base? Neither, I’d say.

No doubt, Gizmodo has turned the tech news cycle on its head this week with its exclusive on the iPhone 4G. Everybody from MSNBC to Good Morning America, and even the ladies on The View are talking about what is arguably the biggest leak in consumer technology history.

What has ensued beyond just the basic story of 27-year-old Apple developer Gray Powell’s now infamous drunken night now has turned to Gizmodo’s culpability in the morass. Some bloggers have gone as far as to publicly call for Apple to sue the publication, but doesn’t Cupertino share some of the blame for this mess?

In the simplest terms, yes. As a journalist who has covered Apple for much of the last half-decade, I have to say I am absolutely shocked that this would have even happened. For a company that prides itself on its secrecy — writing on Apple can be much like walking blindfolded into a maze — this is a stunning lapse in judgement.

Continue reading this story…

Reading the coverage and comments on iPhone OS 4, I’ve seen some sentiment that Apple isn’t really doing anything fresh, and is merely catching up on features already offered on other mobile phones. That’s true for some things, but not with iPhone Game Center.

The service will be a social networking layer for iPhone games. Players can invite their friends to multiplayer games, and in lieu of friends, they can use a matchmaking service to find other players. There appear to be achievements for in-game tasks, which accumulate in a sort of meta-game, and there are online leaderboards as well.

As a list of bullet points, Game Center is nothing new. It’s more or less a clone of Xbox Live, which offers all the same features. Even on the iPhone, the existing Plus+ and OpenFeint networks offer friends lists, achievements and leaderboards.

So, why is this revolutionary? Because there isn’t a single mobile gaming platform that’s already doing it. Sony dropped the ball when it said last year that the PSP won’t support achievement-like trophies, and there’s no platform-wide invite feature that encourages players to jump between games. Nintendo’s just oblivious when it comes to online gaming, and Microsoft, which arguably could do great things with Xbox Live on Windows Phone 7, will still be months from launch when iPhone Game Center arrives.

Predictions are always risky, but I’d be surprised of other phone platforms and portable consoles don’t scramble to follow Apple’s lead. You can’t say that about multitasking, folders and customizable wallpapers.

Easily the line of the day from today’s presentation. Following a question from gdgt’s Ryan Block on why the iPhone will not allow the running of unsigned apps like both Palm and Android already offer, Steve Jobs comes back calling out Android’s “porn store: “There’s a porn store for Android … your kids can download them … that’s a place where we just don’t want to go, so we’re not going to go there.” That is NOT going to make Google very happy…

At the end of today’s presentation, Jobs said that the full benefits of iPhone OS 4.0 would be available only to customers owning the iPhone 3GS and 3rd generation iPod Touch. For customers with an iPhone 3G or 2nd generation iPod Touch, the update would still be available, however functionality (including multitasking) would not work.

Left out was any mention of the original iPhone and iPod Touch, now both coming up on their 3rd anniversary. Looks like this means its the end of the line for these two devices…

comScore’s latest numbers show that Google’s Android platform is really beginning to gain some traction in the smartphone market. From the November 2009 to February period, Android took 9 percent of the market, up sharply from 3.8 percent in the previous three month period.

Notable among comScore’s findings is the fact that Android seems to be attracting a different user base than either market-leading RIM or Apple. RIM managed to increase its share to 42.1 percent, while Apple maintained its 25.4 percent share. Instead, Android’s victims are Microsoft (who fell four percent to 15.1%) and Palm (7.2 to 5.4 percent).

Overall, smartphones have shown 21 percent year-over-year growth, verifying that there is still plenty of room for growth in this still somewhat nascent market.

I’ve long said since Verizon’s “iDont” commercials that the Android platform would for the most part not take market share from Apple, and this has proved that theory somewhat. Those on the platform are probably more likely new to smartphones overall, and the open nature of the OS means that the availability of Android phones is much broader (there is now at least one Android-powered phone on every major US cellular provider).

One thing can be said now, I think: Android is indeed a success.

An iPhone game developer has learned the hard way that one of the following we’ll get your app banned: Publicly slamming the iPhone App Store, or gradually increasing prices until someone pays hundreds of dollars for a simple time waster.

I’m inclined to think it’s the latter, but let’s backtrack.

According to Kotaku, Tommy Refenes’ game, Zits & Giggles (a simple pimple-popping game), disappeared from the App Store this week with no explanation from Apple. Refenes isn’t an unknown developer; he’s part of the team working on Super Meat Boy, a highly anticipated indie game for the Wii, Xbox 360 and PC.

As such, Refenes was one of the speakers during the “Indie Gamemakers Rant” at last week’s Game Developers Conference. These events encourage the speakers to vent on whatever they like, and Refenes chose the iPhone App Store as one of his targets. Not everything he said is suitable for our family-friendly blog, but he did liken the iPhone to those Tiger Electronics LCD games of the early 1990s, which often carried big brand names but weren’t particularly fun to play.

Now for the other facet of the story: Refenes had been playing around with the game’s pricing, noting that people continued to buy the game even as its cost reached $15, $50 and $299. On Monday, someone paid $400 for the game, the same day Apple pulled the plug.

It’s amusing to think that Apple squashed Zits & Giggles because of Refenes’ insolence during GDC, but I have a tough time believing the game’s price wasn’t to blame. It’s not like Apple hasn’t removed apps because of ridiculous prices before. Of course, all this speculation could have been avoided if Apple had explained to Refenes why the app was pulled, or given him a chance to settle on a price, but alas, communication isn’t Apple’s strong suit.

I’m tempted to dig into Refenes’ comments on the quality of iPhone gaming, but that’s an issue best saved for another day and a fresh blog post. On a related note, I do kind of miss those Tiger LCD games…

Thanks to Gizmodo, I got wind of Sky Siege, an augmented and virtual reality game for the iPhone, and I plunked down $3 at the App Store so you don’t have to.

Using the iPhone 3GS to look around, you must track down little helicopters, blimps and fighter jets, taking them out with a machine gun or missile launcher before they get you. You can either play the game with its own grassy field background graphics, or switch on the camera to use your real life surroundings as the battlefield. The game plays the same either way. Here’s a video showing the action:

After playing Sky Siege for about 20 minutes, I’m a little bit dizzy from all the spinning and twisting, and believe me, 20 minutes is all you really need. The virtual reality target practice is amusing at first, but it’s a one-trick pony. It wasn’t long before I had enough of the augmented reality gimmick, cool as it was.

Seeing as Sky Siege is the only augmented reality video game I could find in the App Store, it comes off more as a tech demo than a fully-realized game. Other than using your room as a backdrop, there’s no actual interaction with the real world, which might’ve added some nuance to the experience.  There’s also no dodging or other movement required besides spinning and twisting to aim. As a game, Sky Siege doesn’t stand on its own; if it used virtual thumbsticks instead of an orientation-tracking algorithm, I certainly wouldn’t recommend it.

But there is potential here. I want to see more games that take the real-world theme deeper, like the upcoming Ghostwire for the Nintendo DSi. Sky Siege proves augmented reality gaming is possible on the iPhone — and if you’ve got $3 to burn it might be worth getting just to impress your friends — but it’s not the definitive example of what augmented reality can do.

It’s no secret that Apple and Microsoft have one of the stranger relationships in tech. While Microsoft has produced software such as Office for the Macintosh platform, and Apple has opened its doors to Windows with its switch to Intel, they still are highly competitive with each other. But Cupertino’s relationship with Google is souring far faster, which is the perfect opening for Microsoft when it comes to the iPhone.

Apple is apparently in discussions with Microsoft to give the Bing search engine the top spot for search on iPhone, which currently belongs to Google. These talks have been underway for several weeks, BusinessWeek reports, but nothing as of yet has been finalized.

Getting on the iPhone as the default search engine would be a huge win for Bing. I regularly search for things on my iPhone, so just the boost there in search queries would help Microsoft overall in gaining some search share, something it sorely needs. It’s not clear whether any search deal would also extend to the Safari browser, available on both the Macintosh and Windows platforms.

Either way, its pretty likely that Google wouldn’t be completely erased from the iPhone. YouTube is a popular application. Apple would probably also let users switch back to Google in settings just like it already does now if users wish to search using Yahoo. Bing Maps could replace Google Maps, however.

What are your thoughts on the increasingly hostile relationship between Apple and Google? Who stands to benefit most here? We’d like to hear what you think.

Apple has done all it can to keep Flash off the iPhone. It has used about every excuse in the book — too memory intensive, a drain on battery power, what have you — even though Adobe has pretty much addressed most of these issues. Flash is ready for the iPhone but Apple is not ready for Flash.

Either way Adobe is not going to wait much longer. It’s Creative Suite 5 product, now going through private beta, is going to include functionality that will automatically convert Flash applications to ones that are compatible with the iPhone.

This has the potential to be quite the step forward in iPhone development. TechCrunch’s Erick Schonfeld seems to even go as far as suggesting this as some kind of game changer. CS5 has the potential to expand the developer far beyond the 125,000 iPhone developers out there today, considering there’s about two million Flash developers worldwide.

I hate to rain on anyones parade, but not so fast.

For all that we know of this functionality, it appears to just be a port. Essentially the Flash code is translated into what the software believes is the closest match in iPhone code and goes with it. Like we’ve found out in the past with “WYSIWYG” HTML editors such as Microsoft’s popular FrontPage product, this isn’t always a good thing.

What’s the result? Bulky, slow running applications. In the dog-eat-dog world that has become the App Store, that’s just not going to fly.

I highly doubt that Flash developers that have gone to great lengths to create great Flash apps would allow these same apps to become subpar just to get on the iPhone. While no doubt there will be a subset of Flash developers that will use this feature, it’s not going to be as many as people think.

Bottom line? If these developers want to develop for the iPhone, then they should do it the right way.

If you’re looking to buy an iPhone in New York City, better be ready to visit your local Apple or AT&T store. The carrier has pulled the phone from its online lineup, and is giving little if any reason as to why it has done so. It appears to also be unavailable in Westchester County in New York and also in NYC’s New Jersey suburbs.

The Big Apple is one of AT&T’s problem spots when it comes to its network, and many have blamed high concentrations of the iPhone in the city for the problems. I guess the easiest way to fix this would be to attempt to slow down sales of the device there and hope that it keeps the problem from getting any worse.

“We periodically modify our promotions and distribution channels,” was all AT&T gave Consumerist’s Laura Northrup when she asked for official comment. A online sales reprsentative went further, saying the company  doesn’t “have enough towers to handle the phone.” There’s your answer, folks.

One has to think that Apple must be pretty upset right now. It now appears to be AT&T’s strategy to shut down sales of the iPhone in an area if its network can’t handle it. So who’s next? San Francisco? Philadelphia? Los Angeles? If this move isn’t an argument to trash the AT&T exclusive agreement ASAP, I don’t know what is.

Only a matter of time before Verizon makes fun of this one…

For a brief period last night, iPhone owners without jailbroken phones had access to a fully-functional Nintendo emulator. I’m kicking myself for not spotting 9 to 5 Mac’s story sooner, but it looks like the app got pulled very shortly, maybe a couple hours, after the news broke.

The app was called Nescaline, and its creator is Jonathan Zdziarski, who wrote iPhone Forensics. The $7 app included several homebrew games, but also allowed users to download more games by pointing the app to the URLs of ROM files. On his Web site, Zdziarski says an Apple rep told him the app was removed because it was an emulator. “Ironically, Apple currently has several emulators in the AppStore, so I am going with the belief that someone (likely Nintendo) probably pressured them about this particular application,” he wrote.

He’s right about the App Store having other emulators, but it’s more complicated than that. Currently, it’s possible to purchase C64, which lets you play classic Commodore 64 games, but it only found permanent footing on the iPhone after some drama involving the app’s BASIC interpreter and the ability to hack into it. More importantly, C64 maker Manomio has the rights to the games it sells. Nescaline, by contrast, opened the door to illegal game downloads.

It’s certainly possible that Apple’s trying to avoid legal hot water — Nokia attracted some unwanted attention by advertising that capability on the N900 — but I also think Apple is inclined to reject NES emulators in order to protect the App Store’s business model. When you have games that can make $1 million per month, why give people a bountiful source of free, classic games?

Given that Apple and Nintendo are now competing, I think an official NES iPhone app is unlikely. As for why Nescaline was approved in the first place, I’m thinking it was a simple blunder. I doubt Zdziarski was the first developer to submit a Nintendo emulator.

While many are focusing on market share aspects of a report from mobile ad company AdMob today, there are some other interesting factoids within the report that I found especially prescient considering discussions I’ve been having with my friends lately.

Those partial to Microsoft have started to float the argument that Windows Mobile is still far more popular overseas, with Apple the also-ran in those markets. If we’re going to believe AdMob’s work, that’s probably not a very sturdy argument to make.

Since the iPhone and iPod touch are on the same platform, its somewhat difficult to gauge the true growth of iPhones overseas as they are not separated when it comes to detection (how these statistics are compiled). Either way Apple’s growth in some of these markets is very impressive, and should worry the fans of Redmond.

In Japan, the user base has grown by nearly 350 percent, followed by France which has seen a 300 percent increase. Australia, China, Germany, Italy, and the Netherlands all grew by more than 200 percent during the year. More details of the report can be found in this PDF.

As should be expected iPhone growth in Canada and the US is lagging, although still up 100 percent. There’s a pretty straightforward and simple explanation for this: by far this is the most established market for the device as it has been here the longest.

I think these numbers are certainly beginning to put to rest the assumption by some in Microsoft that Apple can not compete outside of the US. Yes, Cupertino’s struggling mightily selling computers outside of its home markets — but apparently that’s not preventing people from picking up an iPhone.

When you add to this the data that’s showing Android’s doing well, like Colin Gibbs over at GigaOm is reporting, and data that shows RIM is also hitting its stride, you have to wonder if Microsoft really stands a chance to do much of anything in the mobile space.

Who knows, could we soon be talking about a “Halo effect” when it comes to the iPhone, too?

Caveat: As Technologizer reader John Baxter points out in the comments, we should take into account that some of these numbers on growth may be skewed due to the fact that these are emerging markets for Apple’s iPhone. Like the US and Canada, it’s probably fairly likely we’ll see a dramatic drop off in growth here too as the market saturates.

If the iPhone is really no longer an AT&T exclusive in the new year as many analysts are now suggesting and/or predicting, at least one carrier doesn’t want to get caught with its pants down. Verizon Wireless says it has made the changes it would need to make to its network in order to handle what would obviously be a new surge in data traffic.

Better to be safe than sorry, I guess?

Quite a surprising statement considering the company is spending quite a bit of money putting down Apple in its “Droid Does” ads that we’ve all been getting peppered with for the past two months plus. But in a way it’s not because Verizon has watched as AT&T’s network problems have become a serious liability to the company, “Operation Chokehold” notwithstanding.

“Absolutely, I think we could handle it,” Verizon Wireless CTO Anthony Melone told BusinessWeek in an interview. Now, lets not get the story twisted here: Melone is not saying there is any deal yet, but its pretty much common knowledge that the two sides have at least discussed possible partnerships in the past.

Verizon has gone the opposite way of AT&T over the past several years in investing in network infrastructure, spending about $19 billion on the network itself over the past three years. As Gizmodo points out, AT&T’s spending since the iPhone launch on the network itself has actually decreased.

With Verizon readily talking about it’s iPhone readiness, I wonder if T-Mobile USA will start making overtures as well. The carrier has been mentioned much more often recently as a logical next carrier for the device, as it would take minimal changes (adding TMUS’ 1700MHz band to the 3G chip of the iPhone) for it to work.

Going to Verizon — and CDMA — requires a much more involved rework of the device. Going to be an interesting 2010 in iPhoneland, that’s for sure.