I am curious about when the hand sets start coming off the production line in relation to being displayed at a CES.
When they show a phone at CES like the Bionic did they already have units in production?
Saying they are holding back the release for a better form factor alone would be a big deal if they had to retool.
I'm no insider, but my understanding is that they often show devices at CES before they're really finalized, and well before final testing. The Bionic did appear to be pretty much finalized at that time, but testing was a very extensive process, considering the multiple bleeding-edge technologies it had.
During the testing phase, the manufacturer makes a number of units to distribute internally within their company and the carrier its for, but would not put the unit in production as there's always a chance they may want to make a slight hardware revision. Typically, they'll reach a point in testing where there are no longer any major issues with the device, but the software still isn't optimized and the phone is rather slow and buggy. At that point, they'll typically consider the hardware to be complete and may begin production if the carrier plans on releasing it ASAP and they predict a large demand, as all future issues will be able to be worked out with software updates (or so they assume). Then, once the software is optimized enough for consumer use, they can flash the latest software and package the devices for retail sales.
The original Bionic never made it through the hardware-testing phase. They had more or less finalized the hardware, released the full specs, etc and had a number of testing units out. Most likely, they still had a few issues, but wanted to go ahead and lock in the hardware so they could begin production. But VZW, Moto, or both realized that one or more continuing issues was still hardware related, and couldn't be fixed without a major overhaul. Rather than trying to patch it with software and cause their expected flagship to flop and be a failure in the marketplace, they went back to the drawing board and did a major hardware revision (how major we still don't know). BMX said that the testing units were being sent back, and he hasn't yet seen the new device, though he did mention that he's working on another project, so that doesn't mean that others at VZW don't already have one.
So no, I don't think the original Etna/Bionic was in production at all. I'm sure they had tooled up and begun to plan for its manufacture, but I don't believe Moto would make thousands of units of hardware based on a design that was not yet finalized. Sure, its a setback, but I don't see them doing this unless it was absolutely necessary.