That's what Iwata is trying to say.

Translation, "The West sucks, they don't buy enough stuff, we don't like them, we won't make them stuff anymore. Please understand."

They probably have tons of unsold stock of the old 3ds models. So they probably want to clear those stocks  before releasing the new models because the new models will cause sales of the old models to crash.

Interesting explanation. I think there's a lot more to it than that and they don't want to talk about it, but I kind of see where they're coming from.

Starting last November, the 3DS has been hugely down in Japan for "no apparent reason." Of course we know the reason is because it's approaching saturation in that market; so many Japanese gamers have bought one that the remaining target market is too small to support hardware sales growth. So they release a new model to expand that target market to include existing 3DS owners.

This hasn't started to happen yet in the US, or at least it certainly hasn't been happening for a full year already. As recently as this past July, the 3DS wasn't selling too much less than the same month last year. Of course it is still down big year on year, and was down in August, September, and (most likely) October, but I think Nintendo is hoping that the November release of OR/AS will propel the 3DS to a strong Holiday season in the West even without the remodel.

It's a similar picture in Europe, but even more pronounced than in the US. Last Holiday was by far the 3DS's strongest yet in this region, and its sales aren't down much at all in the recent months (excluding October). Once again, I think Nintendo is hoping for a strong November & December, even if it can't match last year's success.

Basically, although the 3DS is really struggling to push strong hardware sales in the West, saturation is not the cause of its struggles in those regions the way it is in Japan. So... their explanation is reasonable, but still tastes kind of sour. You're going to deny us a better product because most of our neighbors still haven't bought your old one? Alright I guess...

3DS sales are low in the US so let's not release the new one yet?
Great logic Nintendo!

That's a really bad idea Iwata-San.

You need actual software to sell a console. Japan had MH4G for the killer app + the bonus of convenience of the improved hardware but that is neither here nor there for the West. Japan didn't need much incentivizing it seemed.

They will launch it FYQ4 with MH4G and, possibly, Xenoblade concurrently to really push the system identity with software.

I have a feeling its more like "We have too much leftover stock in NA & EU to sell before we can think about releasing the New 3DS there". 

The stupid part is that now that everyone knows a new model is coming eventually, less people will be willing to drop money on the older models. Nintendo should have just released the new model and gave the older ones a price drop outside of Japan. 

Lack of software is the problem.

New or old won't really matter this holiday (hence why they are sticking with old) when there's nothing to really push the system and set it apart from its predecessor (would they even have time to meet stock requests for the thing by the holidays? They can't even seemingly keep up with Japan on XLs). Why adopt/buy the new hardware when all you want is Pokemon or Layton? Any sales of the n3DS from second adoption likely won't change if they did it now or later, and may even go up if they schedule it with actual software to make use of the system in some form or another. And anyone who cares enough about not-Pokemon and the finer details of the new system, already knows the n3DS is coming out. The holidays will be selling to people who don't care/suckers (desperate times, eh?).

I mean, what would you even do with the n3DS right now that can't wait a few months? My XL has a murderously infuriating screen tear (from my dropping it) but it plays everything already just fine. No real incentive aside from hard damage to my system exists at the moment. But, come MH or Xenoblade? You could drum up actual worthwhile promotional moves with that.

There's also the fact that I think Iwata wants to avoid ever launching like how the 3DS/WiiU launched.

Hey, Iwata-san, what about Fatal Frame V localization? You need to wait intil game bomb hard in Japan? You already reach it.

Hmm, that may be so but news travels around the world.  Potential buyers outside Japan will be looking forward to getting a New 3DS, which will slow down old 3DS sales.