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Consumers sitting on billions in old iPhones

Americans are sitting on $34 billion in old cellphones, a survey says. Some people don't realize they can sell or recycle them, and others admit they're just too lazy to do it.

By MSN Money Partner Feb 19, 2013 12:38PM

This post comes from Quentin Fottrell at partner site MarketWatch.


MarketWatch logoWhy is an old iPhone still worth hundreds of dollars? New research suggests a surprising explanation: hoarding.


Woman Sitting in a Cafe Texting © Stephen Morris, Vetta, Getty ImagesMore than half of American consumers say they have two or more unused cellphones in their household, according to a new survey. The trade-in value of all those old gadgets: $34 billion, according to resale site -- which has a vested interest in tapping into this possible gold mine. Old iPhones account for roughly a quarter of that sum.


Apple has been able to release a new model every year since 2007 -- 85 million phones and $50 billion in revenue -- partly because it's easy and inexpensive for customers to sell their old ones for new models.


But clearly large numbers of users never part with their old devices.


"If more iPhones flooded the market, the resale price would drop, and there would be less incentive for users to upgrade," says technology analyst Jeff Kagan. The high price of old iPhones helps fuel demand for the latest gadget, he says.


The retail price of a new iPhone starts at $650, but most people pay wireless carriers a subsidized price of $199 with a two-year contract. Since many resale sites offer $200 for previous iPhone models, customers are often able to upgrade to the new model for free.

While some of the old cellphones people have around the house may be damaged beyond repair, almost one in five of those surveyed say they are just "too lazy" to sell their old devices, the survey found. The same number of respondents was worried about jeopardizing their personal data by throwing away or recycling their unused cellphone, while others didn't realize they can make cash from their old phones, says Colin White, the managing director of Only 20% sell or recycle them, he says.


Demand for used phones may pick up in the U.S. if T-Mobile goes ahead with its plans to eliminate the standard U.S. contract system and allows users to pay a lower monthly rate in exchange for higher upfront costs for the phone, says Brian Colello, an analyst at Morningstar. But as each upgrade become less dramatic, he says a "bigger risk" to Apple is that customers will hold on to the iPhone 4S or 5 for a longer period of time instead of buying a new iPhone in 2013. (Apple did not respond to requests for comment.)


Apple still has one of the highest upgrade rates in the industry: 83% of iPhone owners in December planned to upgrade, up from 73% a year earlier, according to Morgan Stanley Research. That rate was just 63% for Samsung and 47% for HTC.


But analysts say the company remains heavily dependent on its iPhone pipeline, hence new products like the iPad Mini and recent rumors of an iWatch. The iPhone accounts for about 56% of revenue -- one reason Apple's share price has fallen from its peak of more than $700 last September, Kagan says.


More on MarketWatch and MSN Money:

Feb 20, 2013 10:38PM
This is silly to sit on cell phones that have alot of value left in them, especially Iphones. Check out  Very honest, Fair, & quick payments. They pay very very well for iPHONES & Other smartphones. EVEN BROKEN & BAD ESN (no stolen material) thanks all
Feb 20, 2013 1:48PM
At US Cellular you only have to do a contract once, then you can keep upgrading phones without one.
Feb 20, 2013 1:46PM
The people with the nicest phones seem to be the unemployed.  My phone is 6 years old and I will keep it until it just won't work anymore.  I can afford a fancy one, but I would rather spend my money on other things or put it in my retirement.

Are people getting new iphones every year because the old one sucks and they keep thinking it will get better?  They couldn't pay me to have an iphone. 

Feb 20, 2013 11:18AM
"Americans are sitting on $34 billion in old cellphones" and then they wonder why they're always broke!
Feb 20, 2013 1:59AM
I have had cell phones for years and given most to charity.  I do worry about my person information on those phones, such as names and addresses for friends.  I hope I remembered to erase that information before donation, but I'm not honestly sure I did.
Feb 19, 2013 7:34PM
T-Mobile won't be eliminating the standard contract system. They'll still keep the highly profitable contract system, but when facing competition from some of the MVNOs, they'll have to put more emphasis on prepaid. My entire family uses Ting ( with smartphones at a cost less than a single smartphone line on T-Mobile (or especially Verizon). No iPhones allowed though... 

Feb 19, 2013 5:33PM
Got a taste of this when we "unblocked" the old iphone and took it to europe (where we live in summer). Instead of using a flip-phone like we always had there, we popped our SIM card in the iphone. Since contracts and "blocked" phones don't exist anywhere in europe (its all prepaid by buying minutes, and you pay for every minute you call out, but pay nothing for any incoming call, no matter where from), it cranked right up - and TIM (the carrier we always buy minutes from) popped up within a few hours of sensing we were using an iphone, and offered us unlimited data/internet for €5 per week. That, plus using various Wi-Fi apps on the phone for our calls (of course also calling the US), video-phoning and SMS (text messages) to cut down on the use of minutes basically had us paying about €35 [$46] per month for EVERYTHING. That a lot cheaper than the $100+ an iphone costs to run on AT&T here in the US!!
Feb 19, 2013 4:08PM
You mindless monkeys really think having the latest cell phone makes any kind of a difference in you pathetic little lives???  Get outside and do something physical.  Maybe actually talk to someone face to face.
Feb 19, 2013 3:57PM
Biggest WASTE of money is a cell phone. I bought a Ooma Telo and now pay $3.76 a month for a phone.
Feb 19, 2013 3:50PM
Send them to Washington and they can give them back as Obamaphones!!
Feb 19, 2013 3:44PM

I keep hearing people can`t afford this and that but everywhere I go people can afford

every mobile device there is.Not only that, but the newist ones there are.

Feb 19, 2013 2:03PM
prepaid wireless service is the way to go.  just get one of these used smartphones from someone upgrading and you can finally get off the 2 year contract treadmill.   i have a hand me down iPhone 4 with a 10/mo no contract plan.
Feb 19, 2013 1:53PM
Gave one to a family member so she wouldn't have to pay for a phone for the prepaid plan she chose. Gave the other to one of the grandkids. It has a  good camera, hi-def camcorder and some game apps and is wifi capable, so they can use it for internet access. Beats the 15 bucks each that I could get for 2 high end smartphones that retailed for around 500 bucks each 2 years ago. Paid almost nothing for them anyway with a 2 year contract. 
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