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iPhone trade-in prices start to slip after iPhone 5 unveiling

September 13, 2012 04:15 PM ET

According to Scarsella, this year's volume shows a much greater interest in the iPhone 5 than took place last year when Apple introduced the iPhone 4S. "Compared to last year, we generated half a million offers. That's 1,200% over the same day last year," Scarsella said. At one point on Wednesday, Gazelle was buying about 30 used iPhones per minute -- a pace of 1,800 per hour.

"It was crazy," said Scarsella.

Like others in the trade-in business, Scarsella has linked the quote volume increases to a much higher level of interest in purchasing the new iPhone 5 than shown prior to the iPhone 4S on-sale date in October 2011. He stuck to that reasoning today.

Thirty-five percent of the trade-in quotes produced on Wednesday by Gazelle were of various models of the iPhone 4S, which for U.S. consumers meant that they were expecting to pay as much as $849 for the new smartphone.

"Some of these are people who are willing to pay full price for the iPhone 5," Scarsella observed. Those consumers were hoping to use what they earn from the sale of their iPhone 4S to subsidize the full-price purchase of an iPhone 5.

Another possible trend gleaned from Gazelle's data, said Scarsella, was a move away from AT&T: 85% of the iPhone quotes generated yesterday were tied to that U.S. carrier.

The iPhone 5 is the first Apple smartphone to support LTE. In the U.S. Verizon has a huge lead over AT&T in the number of markets where it offers the faster data network.

"Maybe this shows that people are jumping ship from AT&T," said Scarsella.

While prices may continue to slide in the short term -- historically, prices have dropped 20% to 25% once the specifics are known of the next iPhone -- they will level off in the next 30 to 60 days, said Scarsella.

"The iPhone 4 and 4S are in high demand, especially the iPhone 4S," Scarsella said. Foreign markets are particularly eager to get their hands on those two models. There, carriers do not subsidize phone purchases, so consumers must pay full price. Instead of being locked into a contract, they buy pre-paid mobile minutes.

On Friday, shortly after midnight PT, Apple and the three iPhone carriers in the U.S. -- AT&T, Sprint and Verizon -- will begin taking pre-sales orders for the iPhone 5.

The reduced-price iPhone 4S and iPhone 4 are available now at $99 and for free, respectively, at Apple's website.

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

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