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iPhone buyback firms unruffled by Apple's trade-in plans

Gregg Keizer | Aug. 28, 2013
Quote volumes climb as early adopters prep for next month's new iPhones.

NextWorth, one of several 're-commerce' companies, offers $340 for a 16GB iPhone 5 that works on AT&T's mobile network.

While NextWorth said its quote volume was similar to last year's, Gazelle said its was running triple that of 2012. "We're up 3X from last year for the period August 1 to August 25," said Scarsella. "We think this will be the biggest iPhone yet, as every year's model is. The increase in offers is already showing that."

In 2012, Apple introduced the iPhone 5 on Sept. 12 and kicked off sales Sept. 21, lining up this year's timetable with last year's.

Scarsella credited the rumors of an impending lower-priced iPhone, dubbed the iPhone 5C for the moment, with some of the pop in sell-back inquiries.

Trachsel of NextWorth said that his company's average quoted price had jumped recently as iPhone 5 owners -- whose devices command the highest price -- began to outnumber those with the older iPhone 4 or iPhone 4S. "The early adopters are doing the math," said Trachsel.

Nor did the buyback firms fear new plans put in place this summer by several U.S. mobile carriers, including AT&T (dubbed Edge), T-Mobile (Jump) and Verizon (Edge), that let customers switch smartphones as frequently as every six months. As part of those plans, customers trade in their current device for a new model.

"The way those plans are structured, they appeal to a subset of smartphone owners," said Trachsel. "And the financials are not very compelling."

And Trachsel and Scarsella agreed that neither company knew how an anticipated lower-priced iPhone 5C will impact the re-commerce industry. The iPhone 5C, which may cost as little as $330 without a subsidy, is reportedly aimed at emerging markets like China and India, where subsidies are rare and the iPhone is priced far above its competitors.

Most of the iPhones that Gazelle and NextWorth purchase are sold in developing countries.

"We won't know how [the iPhone 5C] impacts re-commerce until it has been out there for a while," said Scarsella. "But by this time next year we should have some really good insight."

Scarsella didn't sound worried about the iPhone 5C cutting into the market for used iPhone, calling the demand "insatiable."

Trachsel expects the iPhone 5C to be a stunted version of the full-priced iPhone, a stance contrary to that of most analysts, who believe it will be identical to the current iPhone 5 but encased in plastic rather than aluminum.

"It's really hard to know its impact without knowing what the device will have," Trachsel said. "I don't think re-commerce is in any grave danger, but we'll watch it. It all depends on how much they pack into the iPhone 5C and how much demand there will be for what might be an inferior product."

 

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