Apple Wants Your Old iPhone


Apple has a lot of levers it can pull to reinvigorate iPhone growth. Investors have seen the company start to tug on a handful of these in recent months. Apple has launched initiatives to make older iPhones more affordable in emerging markets to early success, and signs point to an affordable iPhone in the pipeline for later this year.

Here's another one: Apple may soon take your old iPhone.

iPhone trader
Bloomberg reports that Apple may begin offering an iPhone trade-in program as soon as this month, intended to offset the cost of upgrading to a newer model. Apple is reportedly partnering with Brightstar, a distributor that currently works with other carriers and manufacturers to implement exchange programs. Brightstar then turns around and resells the devices in emerging markets for a respectable profit.

The soaring popularity of iPhones has spawned an active secondary market for used devices, with companies like Gazelle capitalizing on the boom. While Gazelle typically offers lower prices relative to what people could sell their iPhones directly to another user for, playing the middleman offers valuable convenience for consumers who'd rather be doing something else instead of putting their devices up on Craigslist.

These services have always existed, but the possible move would be significant as Apple's first direct entry outside of its long-standing recycling program. Setting up a seamless trade-in program at retail locations would facilitate an easier and cheaper upgrade process, while handing off the back-end logistics and inventory to a third-party.

The trade-in program is targeting the U.S. market, where Apple currently has a dominant position. However, the high-end domestic smartphone market is approaching saturation, and a trade-in program could help accelerate its domestic upgrade cycle.

Since market share statistics typically only capture new unit sales, these used iPhones that are being resold abroad wouldn't immediately benefit Apple's global market share as reported by the market statisticians. However, if Apple can capture first-time smartphone buyers in emerging markets into its platform with used devices, then those consumers are more likely to upgrade to a new model eventually, which would help the Mac maker's share stats later on.

Apple's about to become an iPhone trader.

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Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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