Apple's annual developer conference in San Francisco.
Steve Jobs: Free iPhones for Apple Employees, Town Hall Notes
The phones are expected to be delivered to employees by the end of July, after initial consumer demand has subsided. According to Yahoo! Finance, Apple has 17,787 full-time employees.
Meanwhile, ThinkSecret suggests that Apple has about 3 million iPhones manufactured and will be releasing about 1 million of them into the channel this week in an effort "to avoid perceived major shortages."
Arstechnica provides a recap of the speech from Steve Jobs.
The first leg is the Mac business, which Steve addressed by saying that they have the "best Macs" in the new product pipeline ever right now, and that the stuff coming out in the next year is "off the charts."
Regarding OS X:
There is one OS group that does Mac OS X for the Mac and the iPhone, as well as "some iPods we're working on."