This IPhones Fare Well in The Secondary Market

Iphones hold their value better than competing products in secondary markets, boding well for AT&T customers who want to offload their aging Apple devices for Verizon versions today.
According to Gazelle, a Boston-based firm that buys used phones, the iPhone 4 can be resold for 60 percent of its original wholesale value, significantly more than handsets from competing brands. By contrast, for example, HTC's Evo 4G gets 44 percent of its original wholesale value, while the Motorola Droid X, released shortly after the iPhone 4, gets only 42 percent. Research in Motion's BlackBerry Torch receives a mere 36 percent.

The news is good for the pool of AT&T iPhone users looking to switch to Verizon. Since Verizon and AT&T use different cellular technology, customers looking to jump over will need to buy a new iPhone.
The influx of used iPhones may bolster the small secondary market that has sprung up around the Apple device. Gazelle has acquired more than 60,000 used iPhones, while eBay has sold 344,727 used iPhones on its site last year. But the pool of products may widen. Verizon is expecting to sell 9 to 13 million iPhones this year alone, many of them bought by former AT&T customers.

The value of trading in old phones can be high for customers, who often buy models that are heavily subsidized by carriers and can use the money from the sale to pay early-termination fees to get out of long-term contracts. But reducing the impact of switching costs, a strong secondary market could weaken carriers' ability to lock subscribers into long-term contracts.

Manufacturers, meanwhile, face potential risks with a thriving secondary market. Used phones could dampen sales of new products, especially in countries where phones aren't subsidized by carriers. Some manufacturers and retailers have started harvesting old phones, such as Best Buy's new buyback program. Makers like Verizon and AT&T offer trade-in programs as well.