Apple knows that there is a huge aftermarket business of trading in its devices to receive cash, usually to upgrade to its latest iPhone and iPad models. A new report claims the company will now enter that business using its retails stores as a place for consumers to trade-in older iPhones and use the credit to put towards the purchase of its flagship iPhone 5.
When the iPhone 3G was announced, a few companies created a business around allowing consumers to trade-in the first generation iPhone and receive payment for the device with most consumers using it to upgrade to the iPhone 3G. Wireless carriers soon began offering its customers a similar option giving the customer credit towards the purchase of a new device.
Bloomberg is now reporting that Apple has not announced the plan, but people familiar with the program have told the news site how and why Apple has decided to begin offering this service in its retail stores. Apple has partnered with BrightStar Corp. a mobile phone distributor to run the exchange program. It is believed Apple chose Brightstar because it currently handles the trade-in programs offered by AT&T and T-Mobile as well as other device manufacturers.
There is still huge demand for both the iPhone 4 and iPhone 4S and these smartphones will be sold outside the U.S. in emerging markets where the price of the iPhone 5 is out of reach for the majority of people wanting to own an iPhone. The deal allows Apple to accept trade-ins on older iPhones, give customers credit to purchase the iPhone 5, and still profit off of the sales of the older refurbished iPhones when they are resold. Used iPhones collected at Apple's retail stores will only be sold in emerging markets where Apple's smartphone market share is lower and demand for older iPhones is greater. According to sources, by taking this approach Apple will not risk cannibalizing sales of the iPhone 5 in the U.S.
Bloomberg believes the reason Apple is now entering this business is due to overall slow growth of sales of iPhones. The service will allow customers to walk into an Apple retail store, trade-in an older iPhone, receive credit towards the purchase of an iPhone 5, without going through the hassle of sending your smartphone out and having to wait to receive payment. Apple is expected to announce the new service in the near future.
