iPhone trade-ins 'shoot through the roof' as consumers lust for larger iPhone 5

Volume up 2,500 per cent over last year's pre-iPhone 4S announcement activity

iPhone owners are selling their old models at an historic pace because the rumoured iPhone 5 will sport a new form factor, electronics trade-in companies said today.

"We saw volume shoot through the roof," said Jeff Trachsel, chief marketing officer at NextWorth, one of several companies that purchase used smartphones, refurbish the devices, then resell them on eBay and Amazon.com, sell directly to overseas customers, and deal with wholesalers that ship to emerging markets. "We've never seen a spike like this."

Trachsel said the number of quotes last week offered to iPhone owners was up 2500 per cent over the comparable week before last year's announcement of the iPhone 4S.

Gazelle, another iPhone buyer, also has fielded more trade-in requests. "There's definitely been an increase," said Anthony Scarsella, chief gadget officer at Gazelle. "We've seen a 50% increase over the past few weeks."

Scarsella said he did not yet have data comparing this year's sales rush with that of 2011.

Both Trachsel and Scarsella credited the expected change in screen size, and a corresponding new design, for the increased interest in ditching old phones for what most have called the "iPhone 5."

"The spike this time happened a week or two earlier than last year," said Trachsel. "That's a sign of the pent-up demand out there for a new form factor."

Scarsella agreed. "Even people with an iPhone 4S are trading in," he said. "The iPhone 5 will probably have a new body style, so the 4S will look outdated."

The iPhone has had the same look since mid-2010 when Apple launched the iPhone 4.

Speculation has mounted all month that Apple will host an iPhone launch event on Sept. 12, and will start selling the new model Sept. 21. Apple has not yet announced the event or emailed invitations to reporters and analysts.

Gazelle responded last week to the anticipated Sept. 21 on-sale date by extending its usual 30-day quote guarantee until Oct. 1 for sellers who obtain a trade-in quote by Aug. 31. NextWorth may offer something similar, adding time to its 21-day guarantee, to cover the Sept. 21 date as well, said Trachsel.

Prices have not yet begun to fall sharply as more people decide to dump their older iPhones.

NextWorth's Monday quote for an AT&T 16GB iPhone 4S was $300.

"We're holding up pretty well," said Trachsel, referring to quoted prices. "But we expect that [decline in prices] to kick in soon. We're probably near the end of the price increases."

Today, NextWorth quoted $300 for an AT&T 16GB iPhone 4S, up from $263 on Aug. 5. Gazelle's Monday quote for the same phone was $269, down from $277 three weeks ago.

Both Trachsel and Scarsella noted that their firms have been taking quote requests from a large number of iPhone 4 and iPhone 4S owners, newer models that command a higher price.

Another option for iPhone owners looking for cash to buy an iPhone 5 are marketplaces like Glyde.com, a company founded in 2009 by several former eBay executives. Glyde entered the consumer electronics sell-buy business late last year and so does not have credible data for year-to-year comparisons.

At Glyde, which serves as an intermediary between sellers and buyers, listings for the iPhone are also up. "Versus a month or so ago, iPhone 4S [volume] is up about 700%," said Drew Lieberman, CEO of Glyde. "The iPhone 4, which has been selling steadily all year, was up 50% over the past week."

On Monday, Glyde reported a "market price" of $369 for an AT&T 16GB iPhone 4S. If a seller uses the suggested price, he or she receives $332.48 at the conclusion of the transaction. Glyde takes a 10% cut for its services, which include the sales listing and shipping materials, and holding funds paid by the buyer until the item is received and accepted.

Lieberman was optimistic that current iPhones would hold their value, and that after an initial glut of supply caused by early adopters ditching their smartphones, prices would rebound. "We'd suggest selling your old device as soon as the new version is announced," said Lieberman.

NextWorth and Gazelle, on the other hand, have urged sellers to act now to get the best price for their old smartphones.

If past trends repeat this refresh cycle, older iPhone prices will drop between 20% and 30% at some point before Sept. 12, the three companies acknowledged.

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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