As the nation's electronics retailers and wireless companies plot ways to cash in on next week's expected announcement of Apple's latest iPhone, consumers can think of older versions as money in the bank.
Long lines that will wrap around Apple and Best Buy stores when the product is released will likely feature both buyers and sellers, since the value of used and refurbished iPhones has been consistently high enough to support a secondary market that lives and dies by new releases.
The iPhone 5S is expected to bring consumers the newly released iOS 7 operating system, a fingerprint sensor that locks the phone, a better camera and a body in a shade of gold. The iPhone 5C, a lower cost version of the smartphone, is expected to come in an array of colors and will serve as a replacement to the iPhone 4 or iPhone 4S.
"Any time a product transitions, all previous generations of the product get cheaper," said Bob Auray, CEO of Fox Chapel-based Genco Marketplace,a wholly-owned subsidiary of Genco that deals in reverse logistics, consumer electronic returns, and repair and refurbishment, among many other supply chain services. The company also sells discounted electronics and other goods through its consumer site, NoBetterDeal.com.
"This is an opportunity for those who haven't taken the plunge into the smartphone market to take the plunge through the secondary market," he said.
Apple iPhones, despite recent market share encroachment by increasingly popular Samsung smartphones, have consistently maintained higher trade-in values than similar products.
An analysis by investment firm Piper Jaffray showed the resell value of the iPhone 4 models had jumped 10.31 percent on eBay since April, while the values of the iPhone 4s and the iPhone 5 dropped 11.85 percent and 3.75 percent respectively, according to Apple Insider.
During that same period, prices of Samsung's Galaxy S III fell 27.32 percent.
Hoping to keep as much of the valuable secondary supply as possible in-house, Apple's recycling program is now offering in-store gift cards in exchange for old iPhones, iPads, Macs and PCs.
As of Wednesday, Apple's online trade service estimated the value of a white, mint condition 16GB iPhone 5 with all its accessories and AT&T as a carrier at $336. A 16-GB black iPhone 4s with some wear, all of its power cords and a Verizon carrier will bring in $131. Even phones that have been damaged beyond repair are welcome at Apple, which will wipe the user's information clean before recycling the device at no cost.
At Best Buy, a 16GB AT&T iPhone 5s in perfect condition gets consumers a slightly bigger gift card than Apple at $346.50, and a unit in poor condition will fetch a cool $148.50 in gift cards.
One of the most significant factors affecting resale value is whether the phone can be unlocked and used by another carrier. AT&T and Verizon iPhones, which can be unlocked, tend to bring in higher offers than Spring or T-Mobile devices, which cannot.
When it comes to places that actually offer cash for trade-ins, the value of a phone is also dependent on what's available for sale in the primary market.
The Gamestop chain is offering $390 in-store credit or $310 cash for a 16GB AT&T iPhone that looks "like it's right out of the box."
At Downtown-based electronics retailer Ninja Entertainment, prices offered for used iPhones change by the day, according to manager Dave Villaverde. A shortage of available iPhone 5 units during last year's release allowed people to buy the product for $600 and sell for more than $1,000 on eBay or other independent marketplaces.
He was willing to pay around $200 for an undamaged, unlocked 16-GB iPhone 5 on Tuesday, but he said there's no way to know how much they'll cost when the new versions come out.
"With the new release of the iPhone, we expect the prices to fluctuate daily," he said, anticipating price jumps in the range of $25 to $50.
Sellers looking to take advantage of the shifts at their peak should start exploring their options before Tuesday, according to an analysis by New York-based uSell.com.
The study of iPhone sales conducted on uSell following last year's iPhone 5 launch showed that older versions of the phone lost 5 percent of their value the first week after the launch and were worth 20 percent less by the third week.
Conversely, the study also noted that consumers who lock in sale prices before Apple's launch could see up to $72 more for an iPhone 5, $46 more for iPhone 4s and $29 more for iPhone 4. USell is one of several sites that offer a 30-day price guarantee.
Regardless of how much a consumer decides to take for that used phone, the best deal will be with a reputable dealer who can wipe clean the information stored on the phone, said Mr. Auray. He suggested that consumers check the Better Business Bureau or the Federal Trade Commission's site to ensure the company they choose has no consumer complaints regarding use of personal information, lack of payment or other grievances.
Whether consumers go with an unknown or make their way to an Apple Store for the exchange, they help feed a cycle that makes high-end electronics much more accessible.
"As the economy rebounds from the challenges of the last five years, more people are value conscious and well informed enough to take advantage of what the secondary market has to offer," said Mr. Auray.
Deborah M. Todd: email@example.com or 412-263-1652.