Apple Inc.’s (AAPL) latest iPhone is seeing strong demand around the world, but desire for older versions is leading to rapid growth for companies that deal with the used devices.
The market for second-hand iPhones, particularly overseas, is getting bigger as more customers realize the old device sitting in their drawer might help offset the cost of buying the latest version. This coincides with the iPhone’s global popularity driving a high resale value, thus making the used iPhone a highly sought after commodity.
“We are supply constrained,” said Israel Ganot, chief executive of buyback service Gazelle Inc. “There is insatiable demand for this product.”
He noted that wholesalers buy any iPhones that they can get their hands on, but many people in the U.S. simply aren’t aware of their options.
iPhone owners also may not be aware that their old device could be worth more on the used market than they originally paid for it, since the major U.S. wireless carriers subsidize the cost of each iPhone by hundreds of dollars, in return for locking in that customer for two years. As a result, the prices offered for old iPhones may surprise owners. For example, an iPhone 4S–released last October–with 16 gigabytes of storage can be sold on Gazelle for $240 as of Sunday, compared with the $199 that a typical customer paid for the device.