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Apple Stores May Soon Kick Your Old iPhone's Tires

By Rachelle Dragani MacNewsWorld ECT News Network
Aug 27, 2013 4:27 PM PT

Apple is preparing to debut a trade-in program that will allow customers to swap an old version of their iPhone for the latest version of the company's flagship smartphone, according to reports from MacRumors and other publications.

Apple Stores May Soon Kick Your Old iPhone's Tires

Talk of the trade-in program for Apple's U.S. retail stores has been circulating since June. Now that Apple is expected to launch the latest version of its iPhone within the coming weeks, staff training for the initiative is under way, according to TechCrunch, which discovered the program is being tested at some of the company's retail locations.

Calculating Worth

Right now, in a handful of Apple retail stores, consumers reportedly can bring in a working iPhone for evaluation. Employees will take a look at the device, ask the consumer questions about the phone, and use an Apple program to help determine a value for it based on its color, model and any perceived physical or liquid damage.

Apple currently is offering between US$120 and $200 for 16-GB iPhone 4 and 4S models, and about $250 for a 16-GB iPhone 5 in good condition, according to reports, although those amounts could change as the program goes from the testing stage to becoming official.

The consumer receives a gift card for the trade-in amount, which is then applied to the purchase of a new device. Customers can keep the gift card and use the remaining value if there is any money left over, but they cannot simply trade in a phone for a gift card -- the deal is available only to consumers who are buying a new device. Apple then keeps the old phone. It's still unknown what Apple plans to do with the used devices.

An investor asked Apple CEO Tim Cook about the rumored trade-in program during the company's most recent earnings conference call. Cook dismissed it as a rumor, but when asked whether he was opposed to such a program, he noted its success with other channels and praised the environmental aspect of such an initiative.

Apple did not respond to our request to comment for this story.

Boosting Retail Sales

The trade-in program could be a way to drive consumer traffic away from carrier stores or third-party retailers like Best Buy (which has its own trade-in program) and get more customers into Apple's retail locations.

Although they have enjoyed success in recent years, there is always room for improvement, said Colin Gibbs, analyst at GigaOM Pro.

"Carriers and online vendors have demonstrated the business case for accepting trade-ins and selling refurbished phones," Gibbs told MacNewsWorld.

Indeed, as the latest Apple trade-in rumors surfaced on Monday, one of the most popular trade-in companies, Gazelle, announced a guaranteed trade-in price through Oct. 15 designed for users looking to upgrade following the anticipated Sept. 10 iPhone launch. Unlike the expected Apple trade-in program, Gazelle offers users payment in the form of check, PayPal or an Amazon gift card, whereas it seems Apple would only offer credit to those buying a new device.

Making It Worthwhile

Deals like Gazelle's could make it difficult for Apple to make it worthwhile for consumers to go to a retail store rather than get cash from another trade-in program or simply upgrade through their carrier, said Ramon Llamas, research manager with IDC's mobile phones team.

"Apple is really trying to push iOS 7, with its new look and new feel," he told MacNewsWorld, "but for owners of older phones like the iPhone 4 or iPhone 4S that might be a little broken or damaged, they really might not get much money for it. This deal just might not be worth it for a lot of people."

A trade-in program also raises questions about Apple's relationship with its carriers, Llamas pointed out.

"This has the potential to tick off Apple carriers," he noted. "It might be better to let the distribution fall where it may, and let the carriers do what they do best."

If the company does launch a trade-in program, though, straining its relationships with carriers seems like a risk Apple is willing to take in order to drive revenue and improve customer loyalty, Gibbs noted.

"The trade-in program will surely boost traffic to Apple stores, where customers may opt to buy accessories or other Apple products while their trade-in is being processed," he added. "Just as importantly, it creates another point of customer contact for Apple, and it eliminates a point of contact for the carriers that may otherwise handle the trade-in. That gives Apple that much more opportunity to own the customer at the expense of the carriers."

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