Best Buy To Sell Cheaper, Refurbished iPhones

Best Buy is preparing to sell refurbished Apple iPhones to customers, with a $50 discount in price. The refurbished models that Best Buy plans to sell are all units that have been returned to the store within 30 days of purchase, Reuters reports.

The 8-GB version of the iPhone will cost $149; the refurbished 16-GB version of the iPhone will retail for $249. The returned models are all locked, and Best Buy requires that customers sign up for a two-year AT&T service contract.

New, unused versions of the 8-GB and 16-GB iPhones retail for $199 and $299, respectively.

"This is focusing on customers' needs, trying to provide as wide a range of products and networks for our consumers," Scott Moore, vice president of marketing for Best Buy Mobile, told Reuters.

Carrying cheaper versions of the iPhone also allows Best Buy to throw its hat into the ring with retail giant Wal-Mart, which started carrying the smartphone late last year. However, unlike Best Buy, Wal-Mart offers the iPhone unused and at a $2 discount.

Moore denied that Best Buy decided to offer refurbished models of the phone to better compete with other retailers, according to Reuters.

Refurbished models of the iPhone may be tantalizing to at least two consumer groups: new users and first-generation owners.

For a customer who is just considering getting into the smartphone market, saving $50 may make a difference as to whether or not they decide to throw down the cash for the iPhone. And since it may be something of an experiment for them—at least until they've owned the device for a while and can see what it does—entering the market at a lower price point is prudent. Not to mention the fact that a third-generation iPhone will most likely be available by the time their two-year contract with AT&T is up, making them eligible for discounts on the next model.

First-generation iPhone owners are undoubtedly starting to get a little jealous of the second-generation iPhone, with its built-in GPS and, more importantly, 3G functionality. But those early adopters paid top dollar to be one of the first to own an iPhone and they may be a little hesitant to give more money to Apple after spending lavishly the first time. In this case, a refurbished model may be the right stopgap to assuage 3G envy and bridge the gap until the next version of the phone is released.