Prices, demand rise for used first-gen Apple iPhones

"As the head of a company that sells used consumer electronics, David Chen follows sales of the iPhone with the precision of a mathematician. At the outset, the price of the first version of Apple's music-playing wireless device behaved as expected: When the newer iPhone 3G hit store shelves, demand for the earlier iteration plummeted. Then the unexpected happened," Olga Kharif reports for BusinessWeek.

"Within days of the iPhone 3G launch, demand for used, older iPhone models began rising, and prices began a steady climb. "We've been raising our prices over the past few weeks," says Chen, who runs NextWorth.com, a Web site that buys and resells used iPhones and iPods. "It's an anomaly, but there's still a lot of demand for the first-generation [device]." As of Aug. 26, NextWorth Solutions was paying $200 and $300 respectively for gently-used, 8-Gigabyte and 16-GB original iPhone models. That's up $50 from what his company paid a month earlier—and at the high end, on par with the price of a new 16-GB version of iPhone 3G—for the latest iteration of the iPhone, with more features and faster download speeds," Kharif reports.

"'The old iPhone [in mint condition] is very hard to find,' says Shawn Zade, who sells mobile phones through New York-based WirelessImports.com. 'There's a lot of demand,'" Kharif reports.

"Why pay a premium for an older, less advanced model? Some users simply don't want to be tied to a long-term contract with AT&T, the only authorized iPhone carrier in the U.S. The old phones can be unlocked fairly easily, making it possible for people to choose another carrier or to simply use the device with no charge at Wi-Fi hot spots. A method to reliably unlock the iPhone 3G still hasn't been found, Zade says," Kharif reports.

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