Apple CEO Tim Cook unveiled the seventh generation iPhone last week: the iPhone 5S, which features fingerprint scanning technology, and a cheaper plastic iPhone 5C. The 5S will cost $199 with a two-year wireless contract, while the 5C, which will be available for preorder starting Sept. 13,will cost $99. With most offers, it’s possible to sell an old iPhone – which will be phased out by Apple — and make a $100 profit trading in an iPhone 4S for a 5C; many of those who bought that model will be coming to the end of their two-year contract. iPhone 5 holders who bought their phone last year still have one year left on their current contract.
Apple’s entry into the iPhone resale market last month made many consumers aware that old iPhones stashed away in sock drawers could be worth hundreds of dollars. During Apple’s iPhone announcement Tuesday, the number of offers on resale site Gazelle.com peaked at over 600 per second. Gazelle offers $210 for an iPhone 4S and $325 for a 16 gigabyte iPhone 5 in pristine condition. Rival site ProtectCell.com offers $275 for a good condition iPhone 4S and $325 for an iPhone 5, while NextWorth.com offers $225 for a 4S and $320 for an iPhone 5.
“The introduction of Wal-Mart and Apple into the trade-in space obviously increases the competition among pre-existing trade-in suppliers like ourselves,” says Scott McLaren, chief marketing officer at resale company ProtectCell. Apple may have raised awareness of trade-ins, but with a $280 store credit for an iPhone 5 at retail stores, it doesn’t beat the best cash deal on the market.
Amazon currently has one of the best trade-in values for the iPhone 5: the online retailer will give consumers an Amazon gift card worth $363 for a 16GB version from AT&T and a $242 gift card for an iPhone 4S. Unlike Apple and Wal-Mart, Amazon also has a grace period: From Sept. 11, customers who trade in their iPhones with Amazon can lock in their trade-in values until Oct. 15. Without a grace period, customers can sell their iPhones directly to consumers on Amazon and eBay.com EBAY .
But current prices won’t last. There will be a 10% to 20% decline leading up to Sept. 20, says Jeff Trachsel, chief marketing officer of NextWorth, although Gazelle estimates the price drop at up to 25%. NextWorth gives customers a 30-day grace period between signing a contract and handing over their phone; Gazelle offers 50 days. “People will have a hard time getting their hands on the iPhone 5S,” says Anthony Scarsella, chief gadget officer at Gazelle. “Apple wants the long lines, and the press and hype that go with that.”
Of course, the expanded resale market with Apple and Wal-Mart helps prop up the sales of new iPhones with a two-year contract. “Phone makers and carriers must work harder every year to convince people to upgrade their phones,” says Brian Colello, an analyst with Morningstar. “Apple is adding more innovative features like a faster processor and better camera, but some people think that there might not be enough bells and whistles to make it worth it,” Colello says. “iPhones continue to be evolutionary not revolutionary.”
Original article was posted in marketwatch.com
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