Apple Falls Victim to Its Own Hype Cycle

There are millions of people who are in the market for an iPhone, but are holding off on buying one because they believe Apple will introduce a new iteration this fall.

That's probably a good decision. Apple is all but certain to announce an iPhone 5 (though there's a good chance they won't call it that) as early as September. You'd have to be a fool to buy an iPhone 4S when the next-generation model was coming in just a few weeks.

Such a predicament isn't unique to Apple. In the auto industry, everyone knows that the new models arrive in September, so the best time to buy a car is around Labor Day, when dealers are eager to clear the old models from the lots.

But Apple's release cycle doesn't follow the calendar year. The company used to release new iPhones in the early summer, but last year it launched the 4S in October. The 5 could hit in mid-September, but no one knows for sure.

Apple could guide consumers through their product road map, but that's not its style. Steve Jobs brilliantly exploited interest in the company by keeping mum about any product details until he was ready to announce them. However, in the absence of solid information, consumers have nothing to go on but endless rumors and speculation.

In its conference call with analysts on Tuesday, Apple's top execs blamed that rumor mill several times for depressing demand for the iPhone. Sales for the product, which provides more than 50% of Apple's revenues and earnings these days, fell by more than 31% in units compared to the second quarter.

That's not because people are suddenly souring on the iPhone. On the contrary, there's a huge amount of pent-up demand for the new model. A recent survey by ChangeWave Research found that 14% of people said they were "very likely" to buy an "iPhone 5? and 17% were "somewhat likely" vs. 10% and 11.5%, respectively, of those who were asked about the iPhone 4S prior to its announcement in October 2011.

Since Apple is maddeningly quiet about its plans for an iPhone 5, the depression in the buying cycle seems to last longer. You may hold off buying a new car in August if you're waiting for next year's model, but what if you own an iPhone 4? Should you upgrade to a 4S in April or wait a few months more to see what Apple's going to do?

"I think there is a lot of speculation out there. It's hard to sort out," Apple CEO Tim Cook said during the call. "There is an incredible anticipation for future products, as you would expect given what we've been able to deliver in the past."

Quite true, but it might be less of an issue if Apple stuck to a firmer release calendar or at least provided some kind of guidance about when it's new products were going to hit. (Apple actually did do this during the call, referring to a "fall event." Translation: A new iPhone.)

In the meantime, though, customers will have no choice but to scan the Internet for any hints of Apple's intentions. It may be a solid marketing strategy, but it's frustrating for consumers and, as CFO Peter Oppenheimer admitted, for Apple itself. "We're hearing the same rumors and speculation about the iPhone that you are and we think this is causing some speculation in people buying," he said.

Yet Cook appears content to take the hype around Apple in stride: "I am glad people want the next thing, I'm super happy about that," he said. "I'm not going to put any energy into getting people to stop speculating."

Are you waiting for the iPhone 5 to buy your next iPhone? Let us know in the comments.

Image courtesy of Flickr, igrec