The area defined by the screen of one's iPhone or smartphone.
When one is "in penguin space," he or she is paying attention to the screen of his or her phone instead of what is happening around him or her.
First used in the William Gibson novel "Zero History," in which a character uses an iPhone to remotely pilot a flying penguin.
Questioner: Why would she walk out in to the middle of the street, where she was immediately hit and killed by a car, truck or bus?
Rabbi: Dude, she was in penguin space.