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Why Didn't Apple Anticipate the iPhone 4 Frenzy?

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When Apple (AAPL) and AT&T (T) began accepting early orders for the new iPhone on Tuesday, Jon Rifenburg was on his computer at 6 a.m. to be among the first to reserve a phone.

He was one of the lucky ones. So many folks jammed Apple and AT&T websites and customer service phone lines that by Wednesday, AT&T said it was suspending early ordering for now. So did Best Buy (BBY), the nation's largest electronics retailer.

“I stood on line for the first and second iPhones," says Rifenburg, 25, of New Jersey, “so I knew it was going to be bad."

It was actually worse. AT&T said demand was “10 times" higher than early orders for last year's iPhone 3GS. Apple said it received 600,000 orders overall on Tuesday, its biggest for any product.

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Those were from the people who were able to connect. The onslaught resulted in “many order and approval system malfunctions," Apple conceded.

“Many customers were turned away or abandoned the process in frustration," the company said in a statement.

The iPhone 4 officially goes on sale at 7 a.m. June 24, and tech analysts expect stock to sell out quickly.

Apple has a history of underestimating demand at product launches. Some editions of the iPod, the first iPhones and the iPad were hard-to-get items that kept customers waiting for weeks. The iPad, Apple's touch-screen tablet computer that launched in April, is still sold out at many stores. Online sales are backlogged at least two weeks.

Call it smart marketing: Forrester Research analyst Charles Golvin says hard-to-get items make a better media story than an excess of inventory that's not moving. But in this case, there's more to it than that:

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