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Customers take photos while waiting on line to purchase the Apple iPhone 5 outside the Apple Fifth Avenue flagship store on the first morning it went on sale. An entire shadow economy has emerged around the iconic device.
Today is Apple iPhone 5 day. At Apple stores across Southern California, hopeful shoppers have lined up in the hundreds to obtain the glistening new gadget.
These folks will part with money, but they're also engaged in an ad-hoc iEconomy that's using the iPhone — versions both current and past — to generate profits. Here's how it goes...
It's all about real estate. According to LATimes, people who've lined up outside the Apple store at the Grove shopping complex are selling their places on line. Ten kids showed up at sunrise with the goal of selling five spots in line for $300 a pop, for a neat take of $1,500, pretty much all of it profit (they opportunity cost of standing in line at 6 a.m. when you're 19 is pretty much nil). But they miscalculated their market and could only sell the spots for...$100. Still, that's $500 in coin for...standing. In line. In warm and sunny L.A.
iPhone 5's are selling for thousands of dollars on eBay. I found one for $2,650, a fully loaded 64GB version (top of the line) with, allegedly, no contract. That's well over two grand more than you'd pay for the same model at Verizon, if you're patient enough to wait around a few weeks for delivery. The game here was to obtain the device on pre-order and before getting it list it on eBay to monetize an apparently irrational level of demand. One hopes those pre-orders come through on schedule...
The market for iPhone 4S's is heating up. The old model of the iconic smartphone is selling for $450-500 on eBay (in the top-trim 64GB version). Heck, you can make more selling your old iPhone 4S than a bunch of L.A. teenagers thought they could get for standing on line in front of an Apple store!
The DIY economy that has grown up around the iPhone is doing a good job of creating something out of almost nothing. This would probably be difficult to do, but I'd like to get a sense of how big the iEconomy — selling and re-selling old iPhones, accessories, and even physical space related to the iPhone — truly is. One Wall Street analyst thought iPhone 5 sales could add half a point to U.S. GDP for 2012. But I doubt he was taking into account the shadow iEconomy. Do I hear a full point? It's an iPhone stimulus package!
In other news, the only thing Apple fans seem to despise more than the new maps app is the Lightning connector that enables many old iPhone chargers to work with the iPhone 5. Apple is selling it in two version, for $30 and $40. On eBay, those price points has already been cut in half. I'm assuming this is some kind of loss-leader for eBay sellers who have other Apple-related stuff to sell. There's going to be a booming market in these little cheap chunks of plastic as people lose their $30 and $40 versions and, already disgusted that Apple change the charging port, are not happy about the idea of spending that much again.