What happens to the value of Samsung's 'outlaw' phones? - CNET

What will happen to the value of "outlaw" phones like this one?

(Credit: CNET)

Earlier this week I heard from Gazelle.com that the buy-back site saw a 50 percent jump in trade-ins of Samsung phones, particularly the Galaxy S II, in the three days immediately following a jury's finding that the GSII and a number of other Samsung phones had infringed on Apple patents.

Now, on its own, that's not really enough evidence to conclude that Samsung device owners are discarding their phones in utter disgust at the lack of respect for our ridiculously murky and inefficient patent system. After all, a lot of those trade-ins could be people simply unloading an old phone in favor of another blockbuster Samsung phone like the Galaxy S III, which is not part of the patent suit. Or there's always the specter of a new iPhone around the corner that could encourage a trade-in for some extra cash.

After hearing from Gazelle earlier this week, I immediately contacted another buy-back site -- eBay Instant Sale -- to see if it had seen the same pattern. They hadn't yet but promised to pull more data for me to check closer.

That data came back to me earlier today, and it offers even stronger evidence of a run on old Android smartphones following the jury's smack-down on Samsung last week.

"In the three days following the verdict, Android smartphone trade-in offers generated by people using eBay Instant Sale grew by 60 percent when compared to the three day period prior to the verdict," an eBay spokesperson wrote in an e-mail to CNET.

Could it be that when word of the verdict hit, thousands of owners of Samsung and other Android phones started selling in a panic, worried that the value of the devices would soon plummet? Looks like there's evidence to support the theory, and as with a bank run, devaluation becomes a self-fulfilling prophecy.

When sites like Gazelle were suddenly hit with a glut of Samsung phones, their trade-in value did sink as a result of the over-supply. But in the past two days, it looks as though they've recovered a bit, and you can currently get as much as $166 for a flawless Galaxy S II on Gazelle.

But are the long-term value of Samsung phones doomed, especially with the possibility that future updates could disable some features and the potential for injunctions and sales bans on some models looming?

"At this point we are taking a wait and see approach since we are not yet sure what impact this will have on secondary market values," says Jeff Trachsel, chief marketing officer at NextWorth, yet another trade-in site looking at the impact of the verdict on its business. "There is a possibility Samsung secondary market values may actually benefit from the decision. As Samsung takes the time to design around the Apple patents there will be a constraint on supply, and since many of the impacted devices are in-demand, values in the secondary market should hold up well. But again, we can't be sure what will happen, so we are holding our values fairly steady for now."

That's right Galaxy S II fans, now that your patent-infringing gadget just gained outlaw status, it actually might not be the time to sell. It could turn out to be a collector's item. Bonus!