How to make your old iPhone pay for a new one

How much is that old iPhone in your pocket worth? Enough, it turns out, to swap it straight across for the just-launched, shiny, twice-as-fast 3G model — if not more. No iJoke.

Unlike most used gadgets, which plummet in value as soon they're powered up, year-old iPhone 1.0's are still fetching big bucks. To understand why, get a load of how others are cashing in on last summer's technology.

"I just got the new 3G iPhone, so I'm selling my old one," said a seller wanting $350 for a slightly scratched 8-gigabyte first-generation iPhone listed for sale on Craigslist last week.

Wait. A new iPhone 3G can be had for $200. Why pay more for an old one? Nutso, right?

Actually, that's how many secondhand buyers describe exclusive-carrier AT&T's costlier service plan for the 3G. Do the math, and you'll realize it costs $360 more over two years than the plan offered to iPhone 1.0 users. So, the actual cost of a new iPhone starts at $560.

Among resellers, the money generally isn't as good as Craigslist, but it's a quick, clean flip. Dealmakers range from national gadget fix-it shop RapidRepair in Kalamazoo, Mich., to local entrepreneur Slava Franchuk of Clackamas, Ore. Their philosophy: AT&Who?

The 21-year-old Franchuk, a Portland State University student, offers up to $300 for a functional 1.0 iPhone. He then "jailbreaks" it from AT&T to work with other wireless carriers. (Hackers haven't figured out how to unlock the 3G yet.)

In a week, Franchuk says he can resell five phones for a $50 profit on each. "A lot of people want an iPhone," he said, "but they don't want to leave T-Mobile."

On eBay, the going rate is $375-$600.

Selling there? Here's a tip: Offer international shipping. There's crazy demand in China, Russia and other countries where people can't get the gadget from their carriers. Of course, to get top dollar, you have to figure out how to unyoke the iPhone from AT&T on your own.

"I was in China in April," said Josh Bancroft, the supergeek behind TinyScreenfuls.com. "Although it's not officially available there, the iPhone was everywhere — just like the U.S."

Bancroft can't recall another gadget that has ever commanded as much in the secondhand market.

Of course, the used-iPhone market is bound to crash. Apple, Bancroft notes, is on the verge of shipping the iPhone 3G to 72 countries.