The other Apple economy: $2B in devices on eBay

CEO Cook thinks Apple device resale boosts the company's ecosystem

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Apple's official policy, such as it is, is cautious support for the used device market. On Tuesday, CEO Tim Cook took a question about iPhone trade-in programs, and his answer could apply equally well to used Macs and iPads.

"My gut is that the cannibalization factor is low, because you wind up attracting people [who] are much more price-sensitive," said Cook. "I think the great thing is that our products command a much higher resale value than others do. And so that leads to a larger trade-in. And from my perspective, that [means a] larger ecosystem [because] more people wind up getting on iPhone. And if we get somebody to try an Apple product and then buy an Apple product, the likelihood that they begin buying other Apple products is very high."

The analyst's question about iPhone trade-in or buyback programs, and Cook's answer, were connected, in a way, to eBay because the auction site is aggressively used by many of the vendors that specialize in paying cash for used Apple gear.

Companies like Gazelle and NextWorth, for example, often purchase iPhones and iPads from people on Amazon and eBay and resell them in the U.S. market. To unload inventory overseas, buyback companies usually work with an intermediary, a wholesaler or distributor, who ships large quantities to their markets to sell locally at retail or on the street.

And prices, or at least average prices, of Apple goods on eBay are significantly lower than those for new goods.

While the ASP -- the average selling price -- of new Macs sold by Apple in the June quarter was $1,255, eBay's Mac ASP from July 15, 2013, to July 16, 2014, was just $653. Apple's iPad ASP was $444; eBay's was $331.

Some of the eBay prices, naturally, were higher than the average. The ASP of a Retina-equipped MacBook Pro, for instance, was $1,639, reflecting the newness of that product line (Apple first started selling Retina MacBook Pro laptops in mid-2012). Same for the iPhone 5S, Apple's flagship smartphone. On eBay, its ASP was $605, not much less than the full retail price of an unsubsidized entry-level model ($649).

"What I think is happening in the aggregate if you look across the world is that trade-ins are actually hugely beneficial for our ecosystem," said Cook this week. "Someone trades it in and then that goes to either somebody else in that country that is very price-sensitive or somebody in a different country, and I see all of this as good."

He could have been talking about eBay.

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

See more by Gregg Keizer on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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