In an industrial-looking brick building on the outskirts of Boston, old cellphones are getting a second shot at life. Anywhere else, outmoded by ever more impressive devices such as the Apple iPhone 4, released in June, aging phones might have been cast away like so many Beanie Babies, Cabbage Patch Kids, and Tickle-Me-Whatevers. But not here.
Why the reprieve? Simple: Why throw out something that ain't broke?
While refurbishers have spiffed up PCs for years, a new cottage industry revolves around cellphones, which, because of advances in technology, maintain their value much longer than the popular two-year-contract cycle would imply.
Smart phones are, after all, nothing short of miniature computers. The old phones are "old" only because there's something newer and shinier in their owners' hands. They still pack potent processors and sophisticated features such as Wi-Fi and GPS capability – not to mention ever increasing storage for photos, music, and videos.
"Late adopters are perfectly happy to get phones a year after they come out – and pay less money for them," says Kristina Kennedy, senior manager at the Boston-based electronics reseller Gazelle.
Ms. Kennedy pitches the business model as a win-win-win situation. The previous owners get some cash – phones in good condition can bring in close to the original sticker value. The adopters get a marquee model without the usual contract, allowing them to shop around for the best plan available. Finally, Mother Nature comes out on top. Instead of cellphones and their heavy metal batteries winding up in a landfill, they find new families that will love them.
Websites such as Gazelle, YouRenew, and NextWorth first ask sellers a few questions about their devices: Is it in good condition? Do all the functions (such as Wi-Fi) work? Are the accessories included?
In most cases, the sites issue an immediate quote of what they're willing to pay for the phone. If sellers agree to the price, they can print out a prepaid shipping label, pack up the items, and send them off to the company.
When Gazelle receives a device, the phone is examined to ensure that it's in the condition the seller described. If everything checks out, the company sends out a check – or, this being 2010 and all, credits the seller's online PayPal account.
The cash you can get for "old" gadgets varies by model, condition, and demand. This month, for instance, a mint iPhone 3GS brought a trade-in price of $212. Apple sells identical models for $99 and the more-powerful iPhone 4 for $199.
How's that work? Phone companies subsidize the price of practically every phone on the market by hundreds of dollars. (That $99 iPhone costs $499 if purchased without a contract.) Carriers then recoup the cost through monthly fees. But when a gadget-recycling service buys the phone from an owner, the device is "unlocked" – free from a contract. Gazelle customers can sign a deal with a different carrier, or simply enjoy the gadget as a pocket computer and forgo phone service. This allows some shoppers to pay more initially but save money over the course of a year.
Where do the phones – overwhelmingly iPhones, according to Gazelle – end up? Most handsets in good condition are sold on e-commerce sites such as eBay. Gadgets in worse shape are marketed in bulk to larger resellers. Some find homes overseas. Others get new parts – think replacements for shattered screens. Those beyond repair – or simply too old – are sent to an electronics recycling firm that properly disposes of them.
"Broken iPhones are one of the few products that still hold value, because the parts are so valuable," Kennedy says.
Many smart phones are troves of personal information – e-mails, contacts, passwords, bank data. It's a mother lode that thieves dream of. Gazelle and other companies pledge to wipe clean phones before sending them out, but it's still a good idea to purge personal data from any device before parting with it.
Another tip: Even though companies ask for included accessories, the extra money they're willing to shell out for these is minimal – as little as $1 for a power adapter. Sellers can do themselves a favor by hanging onto things such as USB chargers, which work with many devices and can run as much as $30 in stores.