Markets in everything: buy put options on your gadgets

by on January 19, 2008 at 2:57 pm in Web/Tech | Permalink

You pay a small fee up front when you buy a new gadget. In return,
you get the right to sell it back to them for a pre-determined price at
a set time. With an 80GB iPod, for example, you pay $9 up front to be
able to resell it for $50 in a year, $40 in two years and $20 in three
years.

They’re currently taking contracts on iPods, name-brand laptops and
desktop PCs, GPS units, flat-screen TVs and more. All in all, the
return on investment seems sub-eBay, but if you’re really into
long-term planning, the sureness might be worth the penalty.

Here is the full story, and thanks to Eric Kimbrough for the pointer.

sa January 19, 2008 at 6:09 pm

Wonder how they are going to do the accounting
for this?

Zigurrat January 20, 2008 at 12:11 am

It takes care of problems with electronic recycling. It isn’t that cheap or easy to recycle electronics if it is done correctly. It really isn’t any different then a lease, except that the purchaser pays the entire amount up front eliminating credit risk, etc. Leases include impeded puts + financing. Un bundle a lease and buy the part you want.

Anonymous January 20, 2008 at 1:09 am

According to their FAQ, they pay a bit more if the returned device is in “excellent condition” and somewhat less if it’s in “poor condition”.

Missing original manuals, installation disks, accessories, and packaging counts as “impairment”. Who hangs on to those?

Jedediah January 21, 2008 at 4:30 am

That setup reminds me of the switch from instant-reduction-in-price style sales, to mail-in-rebates. Many people won’t qualify for the rebate, forget to turn it in, or have it lost in the mail, and then take long enough to return the rebate that the price reduction is almost like a loan to the firm offering the rebate.
Here many customers may well lose the item, break it, or damage it enough to incur penalties. It also seems like a good bet on inflation. The firm taking and reselling the electronics also gets value-added profit out of being an organized reseller and packaging the used goods that no ebay user would muster.

Matthew January 22, 2008 at 8:53 pm

The problem with getting an iPod for $50 in a year after it was bought is that most consumers will be moving on to the new iPod products that apple has to offer. In light of recent events though, including the continuing decrease of the economic wellbeing, consumers may very well take up the proposition of getting an older iPod but for much less.

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