Apple Inc. is making a new business move by venturing into the smartphone trade-in market, according to reports from Bloomberg citing sources with knowledge of the plans.
According to the sources Apple will work with mobile phone distributor Brightstar to run the new program, which will focus on trade-ins in its retail outlets.
Brightstar has facilitated trade-ins for many companies including AT&T and T-Mobile. This comes at a time when many people are looking to buy used iPhone models such as the 4 or 4s.
“The iPhone is an iconic device that people around the world want to own,” said eRecyclingCorp (another player in the trade-in market) CEO David Edmondson. “If they can’t afford a new Mercedes, they’ll get a used one.”
Tim Cook, Apple’s Chief Executive Officer, wants to give customers a reason to buy the Cupertino-based company’s newest models of the iPhone.
This move is most likely an attempt to combat the recent surge made by Samsung. The maker of the new Galaxy S4 took over the smartphone market in May, according to a report by Canaccord Genuity Analyst Michael Walkley. Since Apple has seen a decline in growth , it has decided to step into the business of trade-ins—a market it pretty much ignored in the past.
AT&T has been accepting trade-ins of iPhones and giving customers up to $200 for their new phones. According to Israel Ganot, CEO of the mobile trade-in company Gazelle, about 20 percent of consumers this year will buy a new smartphone by using a trade-in. This is compared to the 11 percent from 2011.
“The overall size of this market is increasing rapidly,” said Ganot.
Apple already runs an online recycling program for its devices in cooperation with PowerOn Services. According to the sources, this new program is geared towards making trade-ins easier on the Apple customer.
According to another source the trade-in option is will only be available in growing markets so consumers will be drawn to buying Apple's newer phones. This way the older models won't outsell the new.
"The key is to get iPhones into as many people's hands as possible," said BTIG analyst Walter Pieyck. "Selling used phones is one way to do that."
