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]

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