Where old iPhones go to die

iphone_trash_recycle.jc.top.jpg By Jennifer Lawinski, contributing writer


NEW YORK (CNNMoney.com) -- In the wake of Thursday's iPhone 4 launch frenzy lies as trail of unloved, no-longer-needed iPhones cast off by owners trading up for the shiny new model.

Analysts estimate that as many as 1.5 million iPhone 4s were sold on the first day -- and three-quarters of them went to buyers upgrading from a previous iPhone. That means more than 1 million iPhones are headed for the graveyard.

Where do old iPhones go to die?

Some, inevitably, wind up in the trash or the back of a junk drawer.

But many find their way into the secondhand phone market. On Friday morning, more than 5,000 iPhone 3GS units were available on eBay (EBAY, Fortune 500).

Companies that buy, rehab and resell old mobile phones and PDAs are having a bonanza right now -- it's Christmas in June for sites like like NextWorth, CashforiPhones.com and Gazelle.

"It's always a good time of year for us," said Dave Chen, CEO of NextWorth. "Every day we're hitting record numbers -- several hundred to probably over a thousand [units] today. We'll probably end up doing over a million bucks this month just in iPhones."

Chen thinks that business boom will continue as more customers make the move to the iPhone 4.

"It's one of those no-brainer upgrades," he said. "The new ones are subsidized quite heavily by AT&T (T, Fortune 500), and it's a phenomenal new phone."

IPhones hold their trade-in value better than most aging electronics. NextWorth pays an average of $200 for a 16 GB iPhone 3GS in good condition.

That's also what a brand-new 16 GB iPhone 4 costs -- but only with the subsidy AT&T offers to buyers who take out a new, two-year service contract. Buy an iPhone 4 without the contract, and you'll pay $599 for that 16 GB phone.

If iPhone owners break or lose their phones before their contract is up, they need to buy a new, unsubsidized one if they want a replacement. The phones' stiff list prices, starting at $499 for an 8 GB model, drive many buyers to the secondary market.

The result: Brisk demand for used iPhones in good condition. A now-outdated iPhone 3GS can still fetch $300 to $400 on eBay.

Once it buys a phone, NextWorth wipes the data, does light refurbishing work, and resells the phone on the secondary market. Some go to wholesalers and insurance companies, while others are listed on eBay or Amazon.com (AMZN, Fortune 500).

NextWorth also snaps up broken or damaged iPhones.

"There's a large market for folks that just want the parts," Chen said. "We're trying, as a company, to divert goods away from the waste stream and keep them from ending up in a landfill."

Rival recycler Gazelle has purchased 17,000 old iPhones from customers since Apple CEO Steve Jobs announced the iPhone 4 on June 7, spokeswoman Kristina Kennedy said.

Gazelle took a direct approach to cashing in on the iPhone 4 mania: It sponsored notorious first-in-liner Greg Packer, who led the flock of campers waiting for days at Apple's flagship store on Fifth Avenue in New York City. The company paid Packer $250 for each day he spent in line, wearing a Gazelle t-shirt.

"It's been a pretty exciting time for us," Kennedy said. "Usually when the iPhone comes out we always see a really strong spike in our business."

But this year, it's on a whole new level. Gazelle got around 150 trade-ins a day last year when the iPhone 3GS came out. Since the iPhone 4's unveiling, the average has leaped to 1,200 a day.

More than 90% of the iPhones Gazelle buys are in good condition. They're then resold at retail outlets like eBay, Amazon.com and Overstock.com. Broken iPhones are resold to wholesalers.

"Broken iPhones are one of the few products that still hold value because the parts are so valuable," Kennedy said. Gazelle pays about $50 for a dead one.

For those who aren't looking to cash in and simply want to send their iPhone on to a happy retirement, charitable donation is an option.

Steve Glinberg, developer of educational apps like KidCalc Math Fun, runs a recycling program for iPhones and iPod Touches. Glinberg wipes the data, restores the factory settings, installs educational apps and ships the devices to teachers who have requested them.

"IPod touches and iPhones are invaluable to teachers, and are being used more and more in classrooms as teaching tools that draw kids in and engage them in a way that other teaching tools and text books haven't," Glinberg said. "Every day there are more and more apps in the App Store's education category."

It's a whole new twist on giving the teacher an Apple.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 5:14am ET
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.21 0.00 0.00%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Sponsors

Sections

Spencer has been a supporting member of the "Good Morning America" cast for the past three years. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.