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Apple Begins IPhone Trade-In Program to Boost Sales

Apple Inc. (AAPL) has started an iPhone trade-in program in its stores, letting owners sell older handsets back to the company in exchange for credit toward a new model.

Apple’s U.S. retail outlets are now accepting devices, said Amy Bessette, a spokeswoman for Apple. The initiative is starting just before the next iPhone’s debut on Sept. 10.

While Gazelle Inc. and wireless carriers such as Verizon Wireless and AT&T Inc. (T) already buy used handsets, this is the first program run by the iPhone maker at its stores. By buying old phones, they’re aiming to spur new device sales by helping cover the cost of buying the latest smartphone. Apple is teaming up with Brightstar Corp., a mobile-phone distributor, to run the operation, people with knowledge of the plans said in June.

“IPhones hold great value so Apple Retail Stores are launching a new program to assist customers who wish to bring in their previous-generation iPhone for reuse or recycling,” Bessette said. “In addition to helping support the environment, customers will be able to receive a credit for their returned phone that they can use toward the purchase of a new iPhone.”

The money paid back depends on the condition of the phone. An iPhone 5 with 64 gigabytes of memory can fetch $350 through Gazelle’s website, while an iPhone 3GS may receive only $10. The most that any iPhone will sell for at an Apple Store is $280. Previously Apple accepted trade-ins online via mail.

Photographer: David Paul Morris/Bloomberg

Customers look over an Apple Inc. iPhone 5 at a store in San Francisco. Close

Customers look over an Apple Inc. iPhone 5 at a store in San Francisco.

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Photographer: David Paul Morris/Bloomberg

Customers look over an Apple Inc. iPhone 5 at a store in San Francisco.

Replacement Phones

Without a subsidy from a carrier, an iPhone 5 costs $649 to $849 depending on the amount of memory, compared with $199 to $399 with a wireless contract.

iPhones collected through these programs are often refurbished and used as replacements for ones that break, or resold in emerging markets.

Apple sold 31.2 million units of the iPhone in the latest quarter, compared with 26 million a year earlier. Apple shares have declined 31 percent from a record in September, weighed down by investor concerns that the company’s era of rapid growth, fueled by the 2007 debut of the iPhone, may be over.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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