iPhone 4S debut boosts phone trade-in business

Record numbers continue to sell older smartphones, including Android and BlackBerry, to pay for Apple's newest

Users are continuing to sell older iPhones in record numbers to get cash for Apple's newest iPhone 4S, a pair of buy-back firms said today.

The iPhone 4S launched at retail last Friday, and demand has been high, with Apple claiming 4 million sold in the first three days. Demand has also exceeded supplies, and yesterday Apple declined to predict when the two would balance out.

"We continue to see trade-ins in record numbers," said Anthony Scarsella, the chief gadget officer of Gazelle, one of several companies that purchase older smartphones, refurbish the devices, then resell them direct to consumers via eBay and Amazon.com, as well as to wholesalers.

By the end of this week, Gazelle will have bought approximately 50,000 older iPhones since Apple announced the 4S Oct. 4. Last year, Gazelle purchased a total of 30,000 Apple smartphones around the launch of the then-new iPhone 4.

Rival NextWorth has also seen an unprecedented volume of trade-ins in the last several weeks, including a spike that started late last week as users got their hands on a new iPhone 4S.

"There was a big spike in trade-ins when Apple announced the 4S, as expected, said Jeff Trachsel, chief marketing officer at NextWorth, in an interview today. "But we also saw another, smaller spike when the phone became available."

Overall, Gazelle's and NextWorth's numbers back up Apple's contention that the iPhone 4S is a major hit.

"In our wildest dreams, we couldn't have gotten off to a start as great as we have on the 4S," said Apple CEO Tim Cook yesterday during an earnings call with Wall Street analysts.

Trachsel said that NextWorth's trade-in business has been between two and three times that of last year when Apple launched the iPhone 4.

Although the initial reaction to the iPhone 4S trended negative -- many were disappointed that the smartphone didn't sport a larger screen or support the faster LTE networks AT&T and Verizon are deploying in the U.S. -- interest quickly rebounded, said Trachsel.

"A bit of air let out of the tires," he said, referring to the thumbs-down many bloggers gave the iPhone 4S, "but the excitement came back once people had the 4S in their hands or saw one."

As both Gazelle and NextWorth predicted prior to the unveiling of the iPhone 4S, trade-in prices for older models, primarily 2009's iPhone 3GS and last year's iPhone 4, have declined in the last week.

Trade-in prices at Gazelle for a flawless 32GB iPhone 4 have dropped from $284 to $212, said Scarsella. NextWorth, which two weeks ago ran a promotion that guaranteed $250 for any AT&T 16GB or 32GB iPhone 4, now has a similar deal good through Oct. 24 that pays $200.

Gazelle's Scarsella also said that Android and BlackBerry trade-in volume has been higher than usual, up 80% for the former and up 60% for the latter since Apple's Oct. 4 iPhone 4S unveiling.

Scarsella attributed the interest by those owners to the three-day global outage BlackBerry owners recently faced, and the addition of Sprint to the iPhone carrier list this year. The latter gives those customers their first opportunity to switch from an Android or BlackBerry to an iPhone without having to change carriers.

Sellers can get quotes on an older iPhone from either Gazelle or NetWorth by visiting the companies' websites.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

Copyright © 2011 IDG Communications, Inc.

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