Booming resale market: iPads, gently used

By HEATHER SOMERVILLE

San Jose Mercury News

The release of Apple's fourth-generation iPad and the iPad Mini this month has created a booming resale market for used tablets, spawning a virtual yard sale where eager fanboys can get a bundle of cash to put toward their next Apple purchase.

The third-generation iPad, labeled obsolete by some customers annoyed with the quick release of its successor, is selling for more than $400 in some resale markets. Buyback websites have jumped at the chance to turn a healthy profit on the tablet.

The iPad resale market is relatively new -- the device is less than three years old -- but is already flush with opportunity. Online marketplaces such as Gazelle and uSell.com, which buy and sell used electronics, saw a huge spike in third-generation iPad sales immediately after Apple announced its upgrade in late October.

"Our site just kind of blew up," said Anthony Scarsella, chief gadget officer at Gazelle.

Now, almost three weeks later, some buyback companies say the third-generation iPad is still their hottest product.

And gadget websites aren't the only ones turning a pretty penny; tablet owners can take comfort knowing they can get serious cash for their used iPad.

Some Apple customers protested upon hearing that the Cupertino, Calif.,-based company would release a fourth iPad just seven months after the third generation hit stores. Hundreds of dollars down the drain, they said, on a product that became obsolete almost overnight.

But the fuss may have been overstated. While iPad owners can't make back all of what they spent, some websites are offering $300 to $400 for the 32GB version and up to $500 for 64GB. The average price on eBay is $530.

The third-generation iPad cost $499 to $829 new.

BTIG research analyst Walter Piecyk said the secondhand iPad market is a "growing phenomenon." Many customers haven't figured out that the iPad has a strong resale value, and there are people who will happily scoop up an older version.

"It's a new opportunity," he said. "There's real money in it for people."

Daniel Brauser, founder and president of uSell, said Apple fans should use the money they make off their iPad to subsidize a fourth-generation purchase, which has comparable pricing to the third.

"People are ready to get the next latest and greatest on this short product cycle, and they don't realize it, but there's a lot of value left over," he said.

But enough consumers have discovered the gadget resale world for buyback sites to see sharp gains. Average sales for the third-generation iPad doubled on uSell during the two weeks following Apple's announcement, Brauser said. He said the device has one of the highest profit margins; the company makes more than $20 per sale.

EBay also saw a nearly double increase in listings for third-generation iPads immediately after Apple unveiled its new tablets last month, a company spokesman said.

Gazelle, which buys and resells Apple products, saw a 450 percent increase in sales of old iPads. More than three-quarters of those sales were third-generation tablets.

"Anytime Apple releases something new, we see a huge spike not only in [Web] traffic but in the number of gadgets," Scarsella said.

While prices are likely to fall as the tablets age, analysts don't expect this resale boom to be short-lived. Emerging markets, particularly Latin America and Asia, where Apple products are less available and often too expensive for consumers, will continue to drive demand.

"Clearly, there's a pretty big population of people who don't think that the third generation is such a terrible product that they don't want to buy it," said Stephen Baker, a consumer technology analyst with research firm NPD Group.

And the life span of an iPad is significantly longer than Apple's biannual upgrades might suggest. The high-end device doesn't have a plastic case or flimsy screen found in some competing tablets, Scarsella said. IPads can be passed down over three or four years and to as many owners before ending up in the landfill.

"Everybody wants Apple products," Scarsella said. "Apple products just hold their demand really well."