Looming iPad 3 launch sparks tablet trade-in stampede

Buy-back companies, eBay note 8X-to-10X higher interest in dumping old iPads as Apple preps new model

Talk of the impending debut of Apple's newest iPad, including the company's announcement yesterday of a March 7 launch event in San Francisco, has pushed tablet trade-in volumes to record levels, buy-back companies said today.

Their reports were consistent with those from online auctioneer eBay, which Tuesday said that tablet sales -- nearly 98% of which were iPads -- were 10 times greater this month than during the same stretch in 2011 in the run-up to the debut of the iPad 2.

"People are very eager for the iPad 3," said Anthony Scarsella, the chief gadget officer of Gazelle, attributing that enthusiasm for a 500% jump in quotes that his company has served compared to last month. "The jump in volume happened a lot earlier than last year for the iPad."

Gazelle is one of several companies that purchase older devices, including smartphones and tablets, from users, then refurbish and resell them direct to consumers via eBay and Amazon.com, as well as to wholesalers.

The new iPad, dubbed iPad 3 by almost everyone -- even though Apple hasn't officially given it a name, priced the various models or even disclosed changes from 2011's iPad 2 -- will be the third in Apple's tablet line. It's expected to go on sale shortly after the launch event Apple will hold in San Francisco next Wednesday.

Rival buy-back company NextWorth has also seen a massive jump in iPad trade-ins, Jeff Trachsel, that company's chief marketing officer, said in an interview today.

"There wasn't a lot of activity in January, I think because people were keeping their powder dry," said Trachsel about the rumors that swirled even then of an impending iPad 3. "But recently we've seen a pretty massive increase, as much as 800% above last month, in [trade-in] quotes for the iPad."

Both Gazelle and NextWorth provide trade-in quotes to potential customers, who select options to describe the conditions of their iPads and designate the model.

"Most of the trade-ins are iPad 2s, which shows that the early adopters -- people who bought an iPad and then an iPad 2 -- are the first to commit to the iPad 3," said Trachsel.

Scarsella agreed, saying that iPad 2 quotes accounted for 75% of all iPad buying offers Gazelle has given.

The waning and waxing of trade-in activity is directly tied to the news and rumors that float to the top of the Web, said Scarsella and Trachsel.

When talk surfaced three weeks ago that Apple would unveil the iPad 3 the first week of March, trade-in interest shot up 400%, said Scarsella. News Tuesday that Apple had sent invitations to reporters and analysts for the March 7 event sent them soaring even higher.

Prices will continue to decline between now and the actual unveiling of the iPad as sellers flood the market, then level off a week or two after the March 7 introduction, said Trachsel, who based his prediction on NextWorth's data and the trade-in activity around the launch of the iPhone 4S last October.

Both Gazelle and NextWorth have predicted the success of past Apple hardware, including the iPad 2, by the trade-in volume they're handled.

On that basis, the iPad 3 should do very well.

"We've never seen [trade-in volume] of this magnitude before," said Scarsella, comparing the current interest to 2011's debut of the iPad 2.

eBay echoed that, saying the site had fielded more than 125,000 tablet offers on its InstantSale section, almost all of them iPads. The 125,000 figure was 10 times larger than the number of offers sellers posted in the weeks leading to the iPad 2's March 2, 2011, launch.

The top tablet on eBay's InstantSale was the iPad 2 Wi-Fi + 3G for AT&T, but Gazelle and NextWorth both pegged the 16GB iPad 2 with Wi-Fi only as their top trade-ins.

Facts still to be determined, including the price of the new iPad and new features or hardware Apple's added, as well as whether Apple will keep selling the iPad 2 at a lower price -- as most experts expect -- will affect the trade-in prices for older tablets, said Scarsella.

Prices paid out by Gazelle and NextWorth have already started to slide: Today, Gazelle offered $222 for a 16GB Wi-Fi iPad 2 in "good condition," down from $230 on Tuesday. NextWorth said it would pay $250 for the same iPad 2 today, down from yesterday's $256.

Customers can get quotes from Gazelle and NetWorth through their respective websites. Gazelle locks in a quote for 30 days, while NextWorth guarantees the quoted price for 21 days.

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.

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