Aug 31

Apple kicked off a long-awaited iPhone trade-in program for its U.S. retail stores on Friday, the latest in its efforts to attract and retain customers for its smartphones.This trade-in program allows customers that own earlier versions of the iPhone, such as the iPhone 4 and 4S, to bring the phone into an Apple Store and exchange it for a new iPhone model, like the iPhone 5, at a discounted price.

iphone 5The Cupertino based technology leader said its “reuse and recycling” program emphasizes the value of iPhones, even after they’ve been used.

“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,” a company spokeswoman said.

The trade-in program was piloted in some Apple stores. Those stores aren’t just preparing internally for an eventual program, they’ve been offering trade-ins to customers for several weeks. According to a source, this program was presented to them as something that may not be available at every Retail Store.  Some of these pilot stores have been processing ‘multiple’ trade-ins a day at this point.

The program works like this. A customer brings a working, non-liquid-damaged iPhone into an Apple Retail Store. It’s then evaluated by an employee with the  Apple’s EasyPay terminals, which are essentially iPod touches with credit card readers attached. The customer then answers a series of questions about the condition of the device in order to determine a value.

This procedure is similar to the way that Apple handles its iPhone recycling program now, but that is by mail only, covers a wide variety of products and is not offered in-store. If a customer wishes to trade in an old broken device for which there is no monetary value, they can do so as a simple recycle.

Values can range depending on a variety of factors, including device color, physical damage and liquid damage. Though the prices could very well be tweaked before the program goes wide, the range is said to be around $120-200 for 16GB iPhone 4 and 4S models. A 16GB iPhone 5 in good condition could go for around $250, less than is being offered by some of the other trade-in sites like GazelleGlyde or NextWorth.

Still the in-store convenience of the program could definitely offer the advantage here. Being able to walk in and get the deal done instead of mailing it off and waiting is powerful.

Once the paperwork is done, the value is added to a gift card. The balance is applied to a new device, and the customer keeps the gift card if there’s money left over. The store keeps the old phone. The trade-in program is only applicable if you’re in the store to get a new phone, so you can’t just trade it for a gift card.

That value can be used in credit for a new device but only if the customer has an upgrade credit available. So there is a carrier check involved. If a user does not have an upgrade credit, they could presumably pay the early termination fee of their carrier and use the credit towards a new device on another carrier.

Currently, the devices are dropped into a bag and presumably shipped off elsewhere, likely emerging markets, for refurbishment and resale. They are not resold at the store where the trade-ins are being offered. So far, customers have been pretty excited that this option is now available at Apple Retail stores.

Apple’s trade-in program is its latest effort to attract and retain smartphone customers. Unlike offerings from competitors, Apple is requiring trade-in credit only be used toward the purchase of a new iPhone, ensuring customers remain with the company.

Another strategy the company will soon be implement will reduce the entry costs of buying a new iPhone. The Wall Street Journal has reported Apple will begin shipping two new iPhones in September, one of which will be lower cost model expected to be the iPhone 5C.

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