Apple is getting ready to launch an iPhone trade-in program. The motive: wooing users to relinquish older models of the iconic device and upgrade to the iPhone 5.
Bloomberg reports "people with knowledge of the plans" in a story that suggests Apple has teamed with mobile phone distributor Brightstar Corp. to run the exchange program. This is the same company that handles trade-ins for AT&T and T-Mobile.
iPhone trade-in programs are popular. T-Mobile is running one through June 16. Qualified customers can trade in their iPhone 4S or iPhone 4 to get an iPhone 5 for zero down and monthly payments. There are also other options to trade in old iPhones on the market.
According to Bamboo Mobile, there are more than 324 million idle or deactivated mobile phones in the United States. Of those devices, about 15 percent were actually recycled or traded back in during the year. The market study shows that customers are interested in recycling their devices -- particularly when they sell them back to the provider -- and in some cases are becoming more aware of the recycling options, but there is considerable room to grow.
Bamboo Mobile estimates that the buy back or trade-in market was valued around $900 million in 2012 and is expected to grow to a several-billion-dollar market over the next few years. About 48 million used devices were recycled or sold back in 2012. Carrier-owned stores account for about 61 percent of that number.
"New programs have really brought much-needed attention to this issue," said Kate Pearce, strategist and senior consultant at Compass Intelligence. "In 2012, all of the major network operators had in-store trade-in programs; online options continued to grow and so did the availability of automated recycling kiosks in the U.S."
Reclaiming Lost Money
Neither Apple nor Brightstar was immediately available for comment. But Rob Enderle, principal analyst at the Enderle Group, told us a buy-back program could be a great move for Apple.
"There is money in used phones in terms of the components and parts that can be harvested. They can also be refurbished and sold to other countries," Enderle said. "By doing the trade-in program themselves, they control the user experience so there aren't a ton of iPhones floating around outside of Apple's control. Also, they can capture a new revenue stream. Finally, it reduces the possibility that an iPhone user will get enticed to move into another device at the trade-in point."
Enderle noted that Apple already takes iPhones in under repair, so launching a full-blown trade-in program is just a scale issue. He only sees one potential downside: If consumers don't feel Apple is paying them enough for the device, they could feel shortchanged.
"A lot of the Third World gets refurbished phones like the iPhone, and right now Apple doesn't participate in that at all," Enderle said. "I think they view that as lost money."