Ahead of the New iPad, Apple Fans Engage in Arbitrage

Apple Senior Vice President of Worldwide Marketing Phil Schiller talks about the new iPad at its launch in San Francisco Photograph by Kevork Djansezian/Getty Images

One of the humbling joys of being a late-to-the-game Apple fanboi (I got my first iPhone in January) comes from witnessing the exuberance of the secondary market for old-generation iHardware. Watching this seasonal drama from the sidelines invariably makes me feel like that old man in Disney World’s Pyongyang-named Carousel of Progress. As in, “Back in my day, Gorilla Glass was for zoos.”

Well, Gramps, it’s that time again. Last week, Apple, already the most valuable company on the planet, wowed the world when it revealed that the iPad 2 outsold the top computer makers’ PCs last quarter. Oh, by the way, it was launching an even more newfangled third-generation iPad that would further rock our unworthy world.

Countless iSlaves dutifully took to Apple’s site, EBay, and Amazon to try to get coveted dibs on the Jesus Tablet 3.0. With launch-day iPads rapidly selling out, and Apple telling customers they’d have to wait up to three weeks to receive their new rectangles, prices shot up on the secondary market. The enterprising had visions of lucrative iArbitrage dancing in their heads. This seller is asking $1,250 for his base model, which Apple retails for $499.

Check out the new iPad spreads on EBay. There should be a Bloomberg screen for these vital spot prices; heck, we already quote Italian rabbit meat.

Extortion or not, the perfect double-dip trade might go like this: Offload your “like-new” iPad 2 for, say, $300 and get a pair of reservations on the new iPads. Flip one new iPad for at least $1,000 and you effectively end up paying zero on your other new iPad (assuming you keep it and resist the urge to flip that one, too). Air Supply would call that making love out of nothing at all.

Consider this e-mail from a friend who last month EBayed off his 32GB iPad 2 for a cool $510, net of transaction fees, before getting lucky and landing a reservation for a pair of new iPads:

“The real question is what is the exact best time to sell my extra iPad 3 32GB? They’re going for over $800 on EBay, and Apple just announced shortages. It arrives end of this week. On Friday, people at the stores will realize they can’t just show up and get one, so I think that’s when the price would skyrocket.”

Meanwhile, Amazon, Apple’s tech-mindshare nemesis, is offering a chunky premium—but in company credit—for old iPads, as explained by Farhad Manjoo. The holy arbitrage for Jeff Bezos is for Amazon users to apply liquidated iPad proceeds to the purchase of a Kindle, which will then be the gateway to even more Amazon-only revenue.

If you’re like me, you can bide your time and await the imminent end of all this secondary-market froth—when you can directly pay Apple its rightfully deserved trillion-percent gross margin. This time last year, when the iPad 2 was the be-all/must-have/me-me-now-now, Brett Arends of the Wall Street Journal wrote a compelling case for dispassion, with a great, jury-rigged tip to boot.

But, alas, that was last year. Now I’m the one who has an even better alternative: My neighborhood CVS has this totally capable iPad substitute on clearance for $70—today!

Run, don’t walk.

Before it's here, it's on the Bloomberg Terminal.