In the midst of declining market share, and a slowing of growth, Apple is doing all it can to retain customers. With customers seeing the iPhone 5 as old and worn, in comparison to newer Android phones, Apple is trying just to keep those customers happy long enough to wait for the iPhone 5S/6 which will be coming out on September 10th according to most reports.
The buyback program is unprecedented in a market where hundred or thousand dollar devices are often made worthless in a matter of years. The only options have been providers like Gazelle, who pay pennies on the dollar. Apple’s buyback program isn’t paying for your next iPhone, but it does offer 50-100% more, according to my own testing, on iPhones, than Gazelle. For example, an iPhone 4 in good condition could net you around $77 at Gazelle, but $100-120 from Apple.
It’s a brilliant scheme that benefits both customers and Apple. They pay you more than competitors can for your old iPhone, resell it as refurbished to recoup the loss, and you’ve got hundreds of dollars worth of motivation towards buying a new iPhone. If you don’t buy a new iPhone, they don’t lose a penny, because the credit is worthless (it’s only valid towards a new iPhone), and if you do, they recoup the loss with your new purchase. Everybody wins.
Apple hasn’t publicized what’s done with the collected phones, but we can assume it’s similar to what Gazelle does. According to Gazelle’s CEO Israel Ganot, once the phones are collected, “We [Gazelle] sell in a lot of different places. Our biggest channels are eBay, Amazon, wholesale channels and international buyers. Demand for the product is insatiable. People that live on the coasts want the latest and the greatest products. We buy on the coasts, and then we sell to the middle of the country and to developing markets”. Apple would probably do the same, though mostly through their own channels.
As for me, I will likely be making use of that program next month, towards my new iPhone 5S. Will you?