Apple Inc is starting an iPhone trade-in program this month aimed at getting users to upgrade to the iPhone 5 and turn in older models, people with knowledge of the plans said.
Apple has teamed up with Brightstar Corp, a mobile-phone distributor, to run the exchange program, said the people, who asked not to be identified because Apple has not publicly announced the plan.
Brightstar also handles trade-ins for AT&T Inc and T-Mobile US Inc, as well as other carriers and device makers, amid brisk demand for refurbished iPhone 4s and 4Ss in emerging markets.
“This will help them sell more phones, because it will lower the consumer’s out-of-pocket expense,” said Roger Entner, an analyst at Recon Analytics LLC in Dedham, Massachusetts.
Amy Bessette, a spokeswoman for Cupertino, California-based Apple, and Patrick Foarde, a Brightstar spokesman who works for Ketchum Inc, declined to comment.
Until now, Apple paid little attention to the refurbished iPhone market. That is changing as Apple’s growth has slowed in recent quarters. Samsung Electronics Co became the best-selling smartphone brand in the US last month, Canaccord Genuity Inc analyst Michael Walkley wrote in a report this week.
Apple sold 37.4 million units of the iPhone in the latest quarter, compared with 35.1 million a year earlier. Apple shares have declined 38 percent from a record in September last year, weighed down by investor concerns that the company’s era of rapid growth, fueled by the 2007 debut of the iPhone, may be over. Apple shares declined 1.5 percent to US$438.46 at Thursday’s close in New York, leaving them down 18 percent this year.
Samsung has become a market leader by offering smartphones based on Google Inc’s Android mobile operating system, which captured 75 percent of the market in the first quarter, compared with 17 percent for phones running Apple’s iOS software, according to International Data Corp.
Trade-in programs are used to support sales of new hardware in mature markets such as the US, where many prospective customers already own a smartphone. Used iPhones collected in the US will only be resold in emerging markets, where Apple’s share is lower and demand for cheap devices is greater, one of the people said.
That way, the resale of Apple’s older models will not cannibalize iPhone 5 sales in the US, the person said.
Apple runs a Web-based recycling service, in a partnership with Roseville, California-based PowerOn Services Inc, offering to pay people for their used iPhones, iPads or Macs. The new trade-in program with BrightStar will only be available at Apple’s retail outlets, letting consumers receive payments instantly and avoid the hassle of shipping their older gadgets, the people said.
Apple also worked with Brightstar to help AT&T and T-Mobile with their recent trade-in promotions, the people said.
Brightstar set up its trade-in division a year ago and is on track to buy and resell more than 15 million devices this year, according to Bela Lainck, president of the buyback and trade-in business at Miami-based Brightstar.