iPad owners rush to dump old tablets for new model

Gadget buy-back company Gazelle says trade-in surge bodes well for Apple

Consumers unloaded their old iPads in unprecedented numbers so they can trade up to Apple's latest tablet, a gadget buy-back company said Wednesday.

The rush to dump the old and use the cash to buy the new is a good sign for Apple, said Boston-based Gazelle.

"It was a perfect storm, in part because of the short time between the announcement and availability," said Kristina Kennedy, Gazelle's director of brand and communications, of the trade-in surge Wednesday. "This as a very good indicator that Apple will sell a lot of iPad 2s."

Wednesday's action on the iPad set a record for the company, with more consumers selling their now-old tablets in an hour than did iPhone owners last summer when Apple launched the iPhone 4.

"Last summer, we only did about 1,200 iPhones the day of the [iPhone 4] announcement," Kennedy said. "We had more than 2,000 iPads in just over an hour Wednesday. This was our biggest trade-in for a single product ever."

Gazelle buys used consumer electronics devices -- everything from smartphones and laptops to video game consoles -- then resells them on eBay, where it has its own "store," or to sites like Overstock.com or, in some cases, to wholesalers.

The prices it pays are determined by the most basic economics: supply and demand.

Shortly after Apple CEO Steve Jobs introduced the iPad 2 Wednesday morning, for example, Gazelle was paying $375 for a working 16GB iPad in top condition. But by later in the day, after sellers started dumping their old tablets, Gazelle was paying just $300 for the same iPad.

Part of the drop in payouts was due to the sudden glut of trade-ins, but Kennedy said Apple also played a part when it cut prices of its remaining inventory of the original iPad by $100. Refurbished iPads from Apple are even less expensive: A 16GB Wi-Fi now sells for $349.

An initial drop in prices wasn't unexpected; it often happens when Apple launches a new product and a large supply is suddenly available. But Kennedy said it was likely that prices might bounce back by this weekend.

IPad owners can get a price quote for their current tablet by answering a few questions on Gazelle's site. Customers ship their gadgets in a company-provided, postage-paid box, after which Gazelle may revise the offer if the device isn't in the described condition. Kennedy said that about 80% of the trade-ins are paid out at the previously quoted price.

Gazelle inspects the device, erases any data on it, pays the seller, then resells the gadget online or, if it has a large number on hand, as it does now with the iPad, sells to a wholesaler.

Of the iPads that were sold to Gazelle on Wednesday, the most popular models were the 16GB and 32GB Wi-Fi tablet, and the 64GB 3G.

Kennedy said selling an original iPad was one way to keep up with Apple's rapid product cycle for its tablet. "Apple is essentially asking people to upgrade a very expensive device every year," she said.

But the buyer's market in old iPads hints that Apple will convince consumers to do just that. "This is not just a successful product, but also a successful upgrade product for Apple," said Kennedy.

Apple will start selling the new iPad 2 on March 11 at its retail and online stores. Although the company kicked off iPad pre-orders last year about two weeks before the tablet reached retail, Apple's site says that iPad 2 online orders cannot be entered until March 11.

The iPad 2 starts at $499 and comes in the same configurations as its predecessor.

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@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

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