Apple may start iPhone trade-in program, report says

Apple may start a new trade-in program for older iPhones in its stores, according to a Thursday report from Bloomberg.

The program would be aimed at encouraging those with older iPhones to upgrade to newer models, the report said.

Apple offered a trade-in service in advance of the launch of its iPhone 5, offering users a gift card in exchange for recycling their current phones.

Apple spokesman Nick Leahy declined to comment on the report.

Old iPhones are good business, and many companies, such as GameStop, Best Buy and online services such as uSell, accept trade-ins of older Apple phones in exchange for cash or store credit.

According to Bloomberg, the program could also help Apple shore up its position in emerging smartphone markets such as China, where the comparatively high price of Apple phones keep some consumers away.

Markets such as southeast Asia, Africa and the Middle East are some of the largest for resell markets, said Israel Ganot, the chief executive of Gazelle, an online mobile trade-in service that’s been operating since 2007.

“The average consumer in this market cannot afford to buy a new generation device,” Ganot told The Washington Post. “Many of those markets do not offer subsidies or face high import taxation. The average consumer will end up paying somewhere between $800 and $1,500” for a top-of-the-line smartphone such as the iPhone 5, he said.

Trade-ins from countries such as the United States, he said, provide an opportunity for people in those other markets to pick up a phone for somewhere between $200 and $400. While that’s still expensive, he said, the demand is definitely there. Technology analysts back that up, noting that in some areas the iPhone 4S and 4 actually sell better than the iPhone 5.

There’s plenty of supply on the way. With new smartphones coming out every year, American consumers are likely to upgrade their phones much more frequently than they used to, using the money they get from a trade-in to defray the costs of a new phone or new contract.

If Apple steps into the resell market in a big way, Ganot said, he thinks that the idea of trading in an old phone to help pay for a new one will become more mainstream.

Right now, Ganot said, he estimates that about 20 percent [of cellphone owners] will generate $5 billion in sales in the resell market by 2015. If Apple joins the fray, however, he believes that estimate becomes “conservative.”

“We believe all boats will rise with the tide,” he said.

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Hayley Tsukayama covers consumer technology for The Washington Post.
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