Apple 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, a mobile-phone distributor, to run the exchange program, said the people, who asked not to be identified because Apple hasn’t publicly announced the plan.
Brightstar also handles trade-ins for AT&T and T-Mobile, as well as other carriers and device makers, amid brisk demand for refurbished iPhone 4s and 4Ss in emerging markets. By offering money for older smartphones, Apple and the wireless companies are seeking to entice consumers to upgrade to the latest models, while profiting through resales abroad.
“The overall size of this market is increasing rapidly,” said Israel Ganot, chief executive officer of Gazelle, an online mobile-device trade-in company.
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Amy Bessette, a spokeswoman for Apple, and Patrick Foarde, a Brightstar spokesman, declined to comment.
AT&T is now paying as much as $200 for working iPhone 4s and 4Ss, which could let some customers buy an entry-level iPhone 5 for no money down.
Until now, Apple paid little attention to the refurbished iPhone market. That’s changing as Apple’s growth has slowed in recent quarters. Samsung became the best-selling smartphone brand in the United States in May, T. Michael Walkley, an analyst at Canaccord Genuity, wrote this week.
Trade-in programs are used to support sales of new hardware in mature markets such as the United States, where many prospective customers already own a smartphone. Used U.S. iPhones will only be resold in emerging markets, where Apple’s share is lower and demand for cheap devices is greater, said one of the people. That way, the resale of Apple’s older models won’t cannibalize iPhone 5 sales in the United States, the person said.
Apple runs a Web-based recycling service, in a partnership with PowerOn Services, 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 avoiding 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.
The company collects 80 percent of its used devices in the United States, and resells most of them through distribution centers in 50 countries, Lainck said in late May.
Brightstar also owns an auction house in Hong Kong, and a division that provides refurbished phones to insurance companies seeking inventory for clients who have lost or broken a smartphone.