I'm no rocket scientist. (Not that being a rocket scientist would help in this instance) But it seems to me, that as Einstein might say, it's all relative. Let's set up the double slit experiment, so that there is a device to measure which slit (A or B) the electron went through. But let's isolate it, so that an outside observer, (You) has no information regarding the state of the device, (You don't know what it saw) then as far as the device is concerned the electron has been observed, and the wave function has collapsed, but as far as you are concerned, it has not been observed, and the wave function has not collapsed.
What has happened is that the state of the electron, and the state of the device, have become entangled. From the device's point of view, the electron's wave function has collapsed, and the electron has gone through one slit or the other. Simple, end of story. But from your POV, you still have no information about which slit the electron went through, the wave function hasn't collapsed at all, the electron still exists in a state of superposition, having gone through both slits. But what has happened, is that now, the device also exists in a state of superposition, because you have no way of knowing what the device observed. You have no way of knowing what state it's in. To you the device has observed the electron going through both slit "A" and slit "B". Reality for you is dependent upon the information you have, and not the information that someone or something else has. For you, the electron and the device are both in a state of superposition.
But it's not just that both the electron and the device are in a state of superposition, but they are in fact entangled, because if you know the state of one, you'll automatically know the state of the other. But as long as you don't know either one, the entire system of electron and device, is in a state of superposition, relative to you.
So the correct answer, as I see it, is that it's all relative. The device "might" act as an observer, but only relative to itself. Everyone acts as an observer for themselves, and only for themselves. In reality we have no way of knowing if the device collapsed the wave function or not, to find out we would have to look, and that would effect the experiment. But what we can know, is that the device, or any other observer, cannot collapse the electron's wave function for us. The wave function as it pertains to us, is completely dependent upon the information that is available to us.
But like I say, I'm no rocket scientist, and there is a very good chance that I'm completely and utterly wrong. In which case I'm sure that someone will set me straight. Or at least attempt to.