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New Model Didn’t Hurt Resale Value of Older iPhones

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Sales of the unexpected: iPhone 4 resale prices are still mysteriously high.

Apple slashed the price of the iPhone 4 when it released its newest model yesterday, but the older devices surprisingly have retained their value on the resale market.

Analysts didn’t expect that. Usually, prices plummet after the announcement. But resale site Gazelle.com says that the iPhone 4 is going for $250 on the secondary market, if it’s in “flawless” condition, down from a high of $285. Gazelle had 5,000 iPhone trades on Tuesday, three times the peak daily amount it had when Apple upgraded the iPhone 3GS to the iPhone 4. And eBay is offering “Instant Sale” guaranteed-price sales of around $357 for an AT&T 32GB iPhone 4 – the only iPhone on the U.S. market where consumers can simultaneously make voice calls and use data. All prices fluctuate daily.

The new iPhone 4S looks identical to the iPhone 4 – though it has some nifty software upgrades – so status-conscious consumers don’t mind being seen chatting on the old phone. Apple fans can pretend they have the iPhone 4S with its “Siri” voice-activated personal assistant without paying for the upgrade, one loyal customer said. “You can get anyone to believe you have a 4S if you have an iPhone 4,” says Mark Cunningham, a London-based Apple fanatic who has been scouring U.S. resale sites. “Just get any iPhone and shout trivial questions at it.”

Apple enthusiasts are also impatient. Although many disappointed consumers will be holding out for an iPhone 5, which is expected sometime next fall or summer, there is a hardcore group that will always make the upgrade — especially if they’re at the end of the current cell phone contract. “A new design would have been great for us,” says Anthony Scarsella, chief gadget officer at Gazelle.com, “but people are not used to waiting for more than 12 months for a device for Apple. There was so much hype and delays.”

Resale sites are still benefiting from overseas interest and 3GS sales. Scarsella says one-third of their iPhone trades involve the 3GS version. “There’s also pretty good overseas demand,” says Jeff Trachsel, chief marketing officer at NextWorth.com. eBay “Instant Sale” has generated more than two million smartphone offers since launching in October 2010; on Tuesday, 50,000 people filled out an eBay online valuation form for their iPhones – 15 times more than the average day. Demand is also brisk for used smartphones as some consumers hack the phone and use it on a network that doesn’t carry the iPhone. (Apple was not immediately available for comment.) Disappointing upgrades aside, Todd Witkemper, a spokesman for eBay, says it’s always pricier to buy new iPhones without a plan.

Bottom line: The resale market has yet to be flooded with the iPhone 4. Be warned, however. Prices will start falling eventually. “It won’t be an immediate decline,” Trachsel says, “but it will happen.”

Have you ventured into the online netherworld of used iPhones?

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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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