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Booming Used iPhone Market Boosts Carriers, Mixed Blessing for Apple

A new study reveals that the large number of used iPhones bought by or given to new owners is largely benefiting carriers, and may even be positive for Apple as well.

The so-called "secondary market" grew considerably after the release of the latest handset from Apple, John Paczkowski of All Things D writes.

A recent Consumer Intelligence Research Partners (CIRP) study, that researched the evolution of the special market of used handsets in US, reveals that this market is becoming increasingly significant.

Interestingly, around two thirds of the smartphones were given to new owners (64%), as opposed to sold (36%).

After the fifth generation iPhone hit the market in October last year, more than a half (53%) of the users who upgraded to the latest handset off-loaded their old smartphone to this secondary market.

As Apple customers are known to be loyal and upgrade within the same brand of devices, 49% of the handsets reintroduced to the market by the new iPhone 4S owners were also iPhones.

Due to their specific features, iPhones are good products for those users who are interested in second-hand but still high-end phones.

"iPhones also had the advantage of having a useful second life as iPod touch substitutes, which made their used value a little clearer from the start," Mike Levin, co-founder of CIRP, comments.

Carriers are clearly delighted to have the extra custom; figures show that between 10% and 15% of users on the major US networks have second hand devices. But surely it can't be good for Apple?

“It hurts Apple because it creates competition for new iPhones, which we see in the relatively modest sales of reduced-price iPhone 4 and free iPhone 3G units," Levin observes.

"But it also benefits the company because used iPhone customers aspire to own the newest and best iPhone, so they are likely future new phone customers. In fact, they are likely new entrants to the Apple ecosystem, who otherwise would not have found a way in,” he adds.