The next-gen iPhone has been discovered and now there are photos and videos of it. The prototype was allegedly found on the ground of a San Jose bar in a stealthy looking case to hide its identity. The person who found it immediately contacted tech blogs and sent pictures as evidence. Early theories were that it was a Chinese knockoff, but those theories have been proven wrong and it looks like the prototype is legit. Apparently the iPhone was running a special version of iPhone OS 4, but was sent a remote wipe by Apple, which killed any chance of software inspection.

The hardware was intact however, and the next-gen prototype iPhone ended up in the hands of Gizmodo, who has closely examined it for details. The immediate features that stand out are the glass backing (an Apple patent pending) and a front-facing camera. While the design is clearly unfinished, there is a distinct departure from the curved backing that Apple is known for. The use of a glass back means it is more durable and possibly provides better wireless reception.

Other notable features are a camera flash, a Micro-SIM card slot (like the iPad), a higher resolution display, separated buttons for volume, and a larger battery. The next-gen iPhone appears to be a fully functional design, with the internal components tightly packed in, and Apple branding all over the place. This really seems to confirm it’s authenticity, if it was a fake there would be no reason to use real components, and it features perfect Apple markings that are usually not identical in fakes. Gizmodo suggests that the separated volume buttons could be used when taking pictures, providing a physical button for taking a picture instead of hunting for the trigger on the touchscreen.

There is far too much evidence, and supposedly Apple is looking for a lost prototype. Could it be that we are looking an early test unit for the next-gen iPhone? Close examination seems to confirm it. The question is how long before Apple is knocking down doors to get their iPhone back. I wouldn’t be surprised if they track it down. I also wouldn’t want to be anywhere near a pissed off Steve Jobs today.