Apple iPhone 4
Apple's iPhone 4. Apple

The story about Apple's lost iPhone 5 prototype just keeps growing, with San Francisco police involvement, while the company has no comment. Employees are just laughing all the way to the corporate bank, ready to pile more onto the company's $76 billion cash hoard once the iPhone 5 is released to unprecedented global smartphone demand that's been brilliantly stoked.

Before release, the iPhone 5 has become the hottest single product the world has perhaps ever known, as Apple's brilliant grass roots marketing strategy continues to pay off. Millions want the iPhone 5 now, and as long as they can't have it, they are eager to follow stories of its development and release.

Like the one about how Apple's iPhone 5 prototype supposedly got lost in July, even perhaps left in a tequila bar. Now the San Francisco police are tied into the story.

On Friday, San Francisco police said they helped Apple security search for a lost item. Hmm. What could Apple have lost? An iPhone 5 prototype, perhaps?

Of course.

San Francisco police issued a press release about the phone was called iphone5.doc. Apple, of course, declined comment on the matter.

A similar thing happened in 2010 before release of Apple's iPhone 4, when a prototype went missing. But then, pictures hit the Web.

This time, police say they tried to track the reported lost item to a San Francisco house, and four police accompanied two Apple employees to the house.

The two Apple (security) employees met with the resident and then went into the house to look for the lost item. The Apple employees did not find the lost item and left the house, the police statement said.

The story of Apple's lost iPhone 5 prototype got cranked up earlier this weekend when CNET, the tech news service, reported that the iPhone 5, not yet released, went missing in a San Francisco tequila bar in July. The story goes that the iPhone 5 prototype may have been picked up in the bar and later sold on Craigslist for $200.

That's when San Francisco police apparently got involved, as Apple tried to track down the iPhone 5 prototype.

But they did not find the phone, according to the report. No images of the iPhone 5 prototype have been released, and we don't even know if the story is real except for police involvement and Apple involvement.

Those aspects are apparently real, and there's something else do do know: Apple's marketing strategy for the world's bestselling smartphone is perhaps brilliance at its best -- as the rumor mill prints currency the company will soon cash in on.

Apple delayed the launch of its forthcoming iPhone from a traditional summer release. And in the months since, the Internet has been blazing with rumors about when the iPhone 5 will hit shelves in the U.S., what the product will look like, and how it will perform.

The latest rumors involving the iPhone 5 are in conflict with whether it will be released in September or October, but it really doesn't matter: Recent polls suggest the product will be a smash success.

Apple has sold more than 110 million iPhones since the company first launched the smartphone product in 2007, but its market share-leading product is likely to explode to unfathomable popularity if rumor and anticipation Web traffic in recent months are any indication.

Every few days or so, Apple iPhone 5 search words surge to the top of the Web's most popular list as the latest rumors do all of Apple's work -- the best free advertising a company could buy.

Apple is nobody's fool, of course, so it's likely a wrong assumption to think that the product's delayed launch and other events like the iPhone 5 prototype supposedly showing up in a tequila bar is anything less than calculated brilliance. Add in the well-time retirement of former CEO and company co-founder Steve Jobs which made global headlines for days and, well, you get the picture.

Jobs is undoubtedly sick and the move, like the iPhone's forthcoming release, was bound to happen sooner or later -- but might as well get a big payoff from retirement timing, no?

Because the iPhone is the world's dominant smartphone product, Apple wants to get this next one right, throwing down a competitive gauntlet that will be hard for others like BlackBerry maker Research in Motion to compete against.

So as Apple works fast and furiously to get the modules and manufacturing lined up for iPhone 5 production, the company carefully plays along with and fuels the rumor mill, generating perhaps the single best promotion campaign for a single product the world has ever known.

Money could not buy this type of hype and sales-generating buzz -- likely not even for the $76 billion Apple has stockpiled in cash -- since grassroots activism is the most powerful.

And Apple hasn't paid a dime for it, beyond salaries to the public relations and marketing personnel who help dangle tidbits to tech-blogs and news organizations to keep the furor going.

It's not like they have to do much work either, since the rumor mill and hunger for information that's a blend of half-baked imagination and reliable information thrives well beyond anything Apple has done beyond delaying the product. For each day that passes without Apple's iPhone on the shelves, that's another day for the hunger to grow.

And grow it does, setting up an inevitable blockbuster launch.

Apple's only challenge will be delivering a product that lives up to the hype. Millions want the iPhone 5, or any information they can get about it in advance.