Apple’s Veil of Secrecy Revealed via Insider Trading Lawsuit

We all know that Apple holds its secrets tight to the chest when it comes to future products in their pipeline. Apple spent years working in secret on the original iPhone, and the iPad was also a surprise to many.

A recent insider-trading lawsuit revealed some details about the lengths Cupertino and Steve Jobs will go to keep new products secret from the world–including its own employees.

Walter Shimoon was a manager at Flextronics International Ltd., and used his inside information to sell to investors. Shimoon was a senior director that had exclusive details regarding Apple’s road map and sales figures.

Bloomberg Businessweek provided some interesting details from the case.

Details about the iPad:

In 2009, Apple told Flextronics about a project known as “K48,” the codename for what would eventually become the iPad. In October that year, Shimoon shared some of the details with a person who is cooperating with authorities, calling it a “very secretive program.”

“It’s a totally new category altogether,” Shimoon said, according to the complaint. “At Apple you can get fired for saying K48 … outside a, you know, outside of a meeting that doesn’t have K48 people in it. That’s how crazy they are about it.”

For example, companies testing the iPad ahead of its release this year had to promise to keep it in a room with blacked-out windows and key-card locks, four people familiar with the matter said in March. Apple also required that the device be tethered to a fixed object.

Details about the iPhone 4 (codename N90 leaked back in May):

Code Name: N90

During the same call, Shimoon shared information about the next-generation iPhone, code-named N90, with two cameras.

“It’ll be a neat phone,” he said, according to the complaint. The iPhone 4 sold 1.7 million units in the first three days after its release.

In another conversation in March, Shimoon discussed what Apple had told suppliers to be prepared for with the release of the iPhone 4, according to the complaint.

“They are telling their core suppliers to plan for 6 million a month,” Shimoon said.

Details about the iPod nano:

In other calls, Shimoon discussed the iPod Nano, how many units of the music player Apple is manufacturing and its forecast for the remainder of the year.

“I wanna pull up the forecast I just got,” he said, according to the complaint. “We’re gonna do about 10 million… we’re gonna do about 12 million module or iPods between August and December, and Christmas.”

Getting fired for just mentioning the word “K48”? Now that’s what you call taking secrecy to another level. We know that Apple employs various techniques to keep secrets from leaking out, but it’s definitely harder when you have to reveal details to suppliers. Shimoon certainly has an uphill battle to climb, especially given the details revealed in the case against him. The Apple legal team is licking their chops right about now.

What do you think? Does Shimoon have a chance to get out of this alive? Or should he look forward to spending the rest of his life in jail?

[Bloomberg Businessweek]

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Auto Strada

    im sure everyone involved in those “secret projects” had to sign a confidentiality agreement before joining the team.

    he should die while choking on someone’s shoe. insider trading is cheating and cheaters are just a little worse than the people who say “like” before every other word. and, i hate “those” people.

  • suckaaaaa!!

    Your right but you are such a douche

  • Santa Claus

    You are right. Especially about the people who like say “like” after every word. Almost as bad as the people who say like “whatever.”

  • Ned

    I think that this person totally abused his job. I hope that he learns something from this. On a side note, Apple certainly does empoy interesting tactics for monitoring leaks, as well. Back in the day, I worked at Apple Canada, and I learned that when the first iBooks came out (the clamshell ones, prior to all the colours) various business units received them for eveluation and testing. Each business unit received a different coloured iBook (not that of the official release colours). For example, all white, all pink, all black, etc. It was not known to each unit that there were various colours of the evaluation units. So, if any leak came out stating that the iBook was going to be pink, for example, Apple would know which business unit leaked the info. Wild huh?

  • Auto Strada

    i am a douche towards people who butcher the English language.

    …and cheaters.