Apple's Cabbage Patch doll

So it is that Engadget is taking its lumps after a very public screwup this week. But there'll be no crowing about a rival's discomfort in this corner. After all, there but for the grace of God go I.

On Wednesday, Engadget reported that Apple was going to further delay the release of its Leopard operating system. It also claimed that Apple would delay the release of its upcoming iPhone, perhaps the most anticipated (or hyped) product in the company's history. The reaction was instantaneous: Apple's shares fell 2.2 percent on the news. Then less than half an hour later, Engadget began to back off its original claims.

The story got emended several times and by the time Engadget posted its final version, we learned that the initial story was based on a purportedly internal memo detailing the delays. Unfortunately for Engadget, the memo turned out to be a prank.

Welcome to the fast and furious world of Internet reporting. The reaction--perhaps it's more accurate to qualify it as an "over-reaction"--to the faux news underscored the hair-trigger times in which we live.

So far, no evidence has turned up to suggest the memo originated on an Apple e-mail server. A more likely scenario is that somebody outside the company sent it hoping to mess with the heads of Apple employees. As we near the midway point of 2007, it shouldn't come as a surprise to learn that e-mail is quite easy to forge.

The episode also demonstrated the frenzy surrounding the iPhone.

As a colleague of mine noted, everyone covering the Apple beat would be willing to sell their firstborn to get an iPhone scoop. To be sure, ever since Steve Jobs first showed off the iPhone at Macworld 2007 in San Francisco, the hysteria surrounding the device has been staggering.

What we know about the product is the following: The mobile device has built-in features such as music and video playback, plus Wi-Fi, Bluetooth and a digital camera. The 4GB version is priced at $499 with a two-year contract; the 8GB version, $599. And it's made by Apple, so by definition, we have come to believe, it has to be cool.

Beyond the raw specs, nobody really has a true sense of how the product will work. That's hardly an accident, because the mystery leads to intense speculation and debate that feeds on itself. Will it be enough to guarantee a hit? That's the $64,000 question. Apple doesn't usually announce products six months in advance of their official launch. But the company is so practiced in manipulating the message to fire up anticipation that the frenzied atmosphere around the upcoming launch of this product is no surprise.

In that sense, I can understand the financial markets' bout of temporary insanity after Engadget's report went live. (Of course, why anybody with brains in their head would dump stock on the basis of an unsubstantiated blog post speaks volumes about the irrationally exuberant times that we inhabit. But that's fodder for another day.)

The purported tip and subsequent stock sell-off showcased in a very concrete way how quickly information can spread in the Internet era, reaching the point where things take on a life of their own. Engadget was just playing into that. Granted, it wasn't doing it so effectively, but the blog site is hardly the only outfit that would have pursued such an e-mail. And it's going to stay this way until Apple officially declares the release date.

How crazy can it yet become? Just wait for the madhouse when the first review models become available. Cabbage Patch dolls, anyone?