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Apple Inc. is not the only company excited about the launch of the latest iPhone last week. Several local companies are hoping to take advantage of the many new mobile phone releases and upgrades — from the iPhone to the Palm Pre — by reselling the previous versions to consumers seeking cool phones at good prices.
As dozens waited outside Apple’s Back Bay store, representatives from Boston-based Gazelle were looking to let people know how to turn their old iPhones into cash. The consumer electronics resale company has seen 3,000 iPhone 3Gs come into their office since the new release last week.
“Any time we see a significant upgrade, especially stepped up functionality, it’s a big opportunity for us,” said Kristina Kennedy, marketing director at Second Rotation Inc., which runs Gazelle.com.
The poor economy is providing a boost to Gazelle and similar businesses, as the pool of people looking to make or save an extra couple of dollars grows.
“So many people don’t even realize the residual value of their phones,” said Bob Casey, chief operating officer of YouRenew, a consumer electronics exchange company in New Haven, Conn. “When we say we’ll buy back your 3G iPhone for about $200, our customers are just ecstatic.”
Apple estimates it sold some 1 million 3GS’s in the first three days of availability, with many of those sales coming from existing iPhone customers looking for the latest and greatest. Other users are looking to have their old phones subsidize the cost of a new gadget, which could cost up to $500.
NextWorth Solutions Inc. of Lawrence has taken in 1,000 iPhones since Tuesday, said CEO Dave Chen. The 3-year-old Babson College spinout company takes in cell phones and other gadgets from online and brick-and-mortar retail sites in exchange for a check, PayPal deposit or Amazon.com or Target gift card.
Determining how much to pay users for their old cell phones is not an exact science. Both Gazelle and NextWorth use proprietary formulas that incorporate market data as well as their own inventory to determine a fair price. At NextWorth, a 16 gigabyte iPhone 3G in good condition would bring in about $220. But while NextWorth’s algorithm calculated price increases, Gazelle’s software incorporated price decreases to account for Apple’s offer to sell the older version for $99 with a two-year contract.
Resellers say the value of secondhand smartphones is driven by two groups: repair shops and consumers. Chen said many buyers of secondhand phones raid them for parts to refurbish phones or repair ones under warranty.
Yet the phones themselves are a draw to consumers who want the gadget but can’t afford service charges of exclusive carrier AT&T Inc., which can run over $100 per month. Gazelle “unlocks” the phones it sells back in the open market, allowing them to be used by multiple service providers.
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