Should you sell your old iPhone?
Friday's iPhone launch will temporarily boost the shadow Apple economy. How much can you get out of your old model?
A uniformed New York police officer, wearing a bored expression, manned the desk outside a Soho Apple store this morning as a line snaked around the block, packed with well over 100 people waiting to buy the new iPhone 5s and 5c.
While the buyers waited, the NYC Police Department's folding table, covered with colored flyers, encouraged them to register their new devices with the police in case of a loss or theft.
Most people in the line appeared apathetic to the police department's efforts. Many have a backup plan in case their new iPhones go missing.
Today's iPhone launch will create a temporary bump in the shadow economy of old iPhones ? those that are traded in, recycled, or kept safe at home out of nostalgia and worry about the fragility of Apple's popular new piece of hipster engineering. Toni Sacconaghi of Sanford C. Bernstein told Forbes earlier this year that used smartphones are making a dent in the market for their newer brethren.
"Our analysis suggests that the used smartphone market is poised to explode ? we estimate that the market will grow from 53m to 257m units over the next five years," Sacconaghi wrote. "By 2018, we estimate that used phones will cannibalize 8% of total new smartphone sales, up from 3% in 2012."
Used iPhones command pretty decent prices ? anywhere from $150 to $500, depending on the model. As a result, there could be a turf war over who gets to make the most money from your old iPhone: you or Apple.
Apple sees profit in reclaiming its own old iPhones, mainly to recycle them and resell them in emerging markets like China. Three weeks ago, in anticipation of the release of the new models ? iPhone 5s and 5c ? Apple launched its reuse program, which enables old iPhone users to trade in their old model and receive an Apple store gift card.
There's plenty of competition: Apple and cell phone carriers such as AT&T, Verizon and T-Mobile are not the only retailers trying to get into the trade-in game.
Until the end of the weekend, Best Buy is allowing customers to exchange any smartphone to get gift cards worth up to $100 to be put towards a new iPhone 5 ? as long as new buyers also agree to a two-year service contract with any of the major carriers. Wal-Mart and GameStop have also launched device trade-in programs.
Such offers sound appealing, but they may not always be the best deal for consumers. It may be more profitable for buyers to check online for better deals and even cash, rather than tying themselves to a particular retailer, says Nik Raman, the COO and co-founder of uSell.com, which serves as a marketplace for those looking to get the best price for their device and is currently working with over 40 sites that purchase used devices.
Even as most retailers ? Apple, Verizon, Wal-Mart, AT&T ? are launching trade-in programs for consumers' old iPhones when they get new devices, some consumers insist on reselling their old iPhones themselves. Only about 30% of consumers trade in their smartphones, according to resaler Gazelle, while 50% never get around to selling them.
A gift card to a particular store feels limiting to some consumers. Douglas Fountain, standing in the line outside an AT&T store in Soho, explained that he has a number of phones at home, but is not ready to part with them just yet.
"I am not trading it in today," Fountain said as he slipped his old iPhone into his pocket.
Fountain, not impressed by the store credit, was reluctant to trade in his old device. Rather, he said, he was going to wait and sell his old phones on Craigslist.
Fountain's plan is a popular one with many consumers, but may not be as profitable as it seems. Some of the people on Craigslist seem to have unrealistic expectations of how much their phones can sell for. One seller was hawking a new 64-gigabyte gold iPhone 5s for around $2,000. One seller in Stonybrook, New York was selling an old white 64-gigabyte iPhone 5 for $795.
Because the shadow market in old iPhones hinges on novelty, it's a bad idea for consumers to wait to sell their old phones. "Sell it earlier than later. Don't sit on the old phone," Raman said, adding that iPhone devices depreciate in value at the rate of 5% per month, while Android devices depreciate at about 10% per month.
The amount you can get for your old iPhone in most online marketplaces depends on the model. The iPhone 5 can fetch $300 on average, while the iPhone 4 can fetch between $150 to $200, said Raman. Currently, the iPhone 4 is the device that is most often traded in. Given that most iPhone users hang onto their devices for about 18 to 24 months, the most traded-in device is usually two years behind the most current version.
Despite consumers like Fountain hanging onto his phone, the trade-in programs have been gaining some traction.
According to an analyst report by the NPD group, over 60% of smartphone customers are aware of trade-in options and
are willing to change retailers (but not carriers) to get the best trade-in deal. About 30% are willing to even switch carriers.
Raman said that big retailers such as Apple and Best Buy getting into the
game has helped consumers become more aware of trade-in programs. Raman says that uSell saw its site traffic triple and even quintuple after Apple announced its reuse program and the new iPhones 5c and 5s.
Khorri Silcott, also waiting in Soho for the new iPhone, said he plans on keeping his old iPhone as a backup. He's stuck with the old one a little bit longer; Silcott left the line at the Apple store after they ran out of the gold version of the new iPhone 5.
"If you lose your phone and aren't eligible for an upgrade, you can't get a discount," Silcott explained while waiting in a much shorter line outside an AT&T store two blocks away on Broadway.
Source: http://www.theguardian.com/technology/us-money-blog/2013/sep/20/iphone-5-apple-trade-resale
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