Apple(s AAPL) may have figured out something Gazelle, NextWorth and others have known for years: iPhone trade-ins can be a pretty good business. Bloomberg reported Thursday that Apple is set to begin its own trade-in program that will encourage owners of older iPhones to upgrade to new models. That will in turn give Apple used iPhone inventory it can turn around and resell in emerging markets overseas.
From Bloomberg’s story:
Apple has teamed up with Brightstar Corp., a mobile-phone distributor, to run the exchange program, said the people, who asked not to be identified because Apple hasn’t publicly announced the plan. Brightstar also handles trade-ins for AT&T Inc. and T-Mobile US Inc., as well as other carriers and device makers, amid brisk demand for refurbished iPhone 4s and 4Ss in emerging markets.
Carriers, as well as third-party iPhone retailers, have been offering trade-ins or cashback for older iPhones for years. T-Mobile made iPhone-trade-in a key component of its new sales strategy when it became the last of the major U.S. wireless networks to offer the iPhone earlier this year.
It’s not said in the report how much Apple will offer for older model phones; will different models result in differing amounts applied to a new iPhone’s price tag? T-Mobile(s TMUS) is offering the equivalent of $99 for a trade-in; AT&T(s T) pays up to $200. Third-party resellers, like Gazelle, will give up to $150 cash in return for an iPhone 4 in excellent condition — its offer varies by condition, carrier and model.
Apple’s reliance on older model iPhones to build up its customer base in price-sensitive markets has been growing lately. CEO Tim Cook has said the iPhone 4 in particular is a strategic part of its vision for expanding its user base in China. We’ve also seen Apple heavily advertising the iPhone 4 in India too. Even in the U.S. the iPhone 4, because it is free on contract, is still very popular.
Using the value of an older device is also a good way of cutting down the upgrade price for customers interested in the latest model. It’s another way of making a late-model device easier on a customer’s wallet without Apple having to offer a totally new “low-cost” iPhone.