Apple's iPhone 5 invite sparks new spike in trade-ins

Tuesday's invitation for Sept. 12 event triples quote volume as consumers look to cash in on old phones

Apple's cryptic invitation on Tuesday to an event set for next week triggered another surge in trade-in activity by consumers wanting to unload older iPhones in time to buy the new model.

Some trade-in companies registered spikes on Tuesday that were as high as 300% above the week before. Apple issued invitations to reporters, bloggers and analysts for a Sept. 12 event that day.

Because the invite features a large number "12" casting a shadow resembling a "5," the expectation is that Apple will roll out a new smartphone called the "iPhone 5" next Wednesday.

"News of the Apple event invitation triggered a lot of activity," said Jeff Trachsel, chief marketing officer at NextWorth, one of several companies that buy used smartphones from consumers. "The number of quotes generated compared to the previous week was up 190%."

Other companies saw an uptick in trade-in activity.

"Tuesday was a pretty interesting day," said Bob Kilinski, the chief marketing officer of CExchange, an electronics trade-in firm that handles programs from 40 brick-and-mortar retailers, mobile carriers and online sources in the U.S. Among its clients: eBay's Instant Sale, Wal-Mart and Radio Shack. "Immediately after the news, we saw a 300% week-over-week jump in the number of people going online to check prices for their current iPhones."

According to Todd Witkemper, a spokesman for online marketplace eBay, quote activity on its Instant Sale website was up 40% Tuesday compared to the same day of the previous week.

The upswing had been expected: In previous Apple product launches, the number of consumers retrieving price quotes for their iPhones and iPads has jumped when news hits that the company has set an event date.

Most of the trade-in vendors, however, anticipate an even bigger day next week, when Apple unveils the iPhone 5 and spells out the new model's hardware specifications and price.

They also again noted that trade-in activity this year has remained much brisker than in 2011, when Apple launched the iPhone 4S.

"It is definitely a lot bigger," said Anthony Scarsella, chief gadget officer at Gazelle, who said that quote activity at his company's website was five times that of 2011 during the same period.

During August, eBay's Instant Sales generated 340% more used iPhone price quotes than the same month last year.

The stronger interest in selling used iPhones this year -- and an earlier surge in appraisal volume than in 2011 -- has prompted trade-in experts to predict that the iPhone 5 will sell like hotcakes. "This will be the biggest iPhone launch ever for Apple," said Scarsella.

"People are not just waiting for this release," added Dan Brauser, CEO of Usell. "They're waiting for it and thinking about it and pushing rumors along even before the release is officially acknowledged by the company."

Usell doesn't purchase used devices itself, but instead fields consumer inquiries, then lists a number of outlets that do, with their current prices, mimicking the kind of comparison shopping long available at, say, travel portals like Expedia.

Although trade-in companies have urged customers to sell their used iPhones as soon as possible -- to get the best price, they've said -- that advice seems misplaced: Prices have generally held steady since early August, and for at least one major buyer, actually increased.

An AT&T 16GB iPhone 4S, for instance, was pegged at $300 by NextWorth today, the same figure it's quoted since Aug. 27. And Gazelle's Thursday quote of $277 for the same phone was up 10% in just two days.

Apple also has a buy-back program -- run by PowerON Service -- that produced an estimate of $285 for a 16GB iPhone 4S, a price unchanged since at least Aug. 29.

eBay's appraisal of $300 for the 16GB iPhone 4S was the same it's generated since at least Aug. 27, but the company said other models had increased in value. Over the last two weeks, said Witkemper, the value of a 64GB iPhone 4S has increased by 5%, while a 32GB iPhone 4 has gone up 7%.

The spot increases may be due to competition among the trade-in companies, which battle for a finite supply of iPhones that consumers are willing to sell.

Some of the firms resell the iPhones they buy on e-marts like eBay and Amazon, while others deal to wholesalers who may ship the older smartphones to emerging markets where dollars are tighter and lower-priced, albeit used, devices are much more attractive.

"It's very competitive," observed Usell's Brauser of the used-device market. "The relatively high-value phones [like the] iPhone 4 and iPhone 4S are in high demand, and will fetch a good retail price."

Apple will reveal the iPhone 5 at the Yerba Buena Center for the Arts in San Francisco, where the company has staged several product launches, including one for the iPad in March. The iPhone event is to kick off at 10 a.m. PT.

iMore.com, the website that in July first claimed Apple would introduce a new iPhone on Sept. 12, said then that the company would begin selling the device Friday, Sept. 21.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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