Apple Inc. (AAPL) is starting an iPhone trade-in program this month aimed at getting users to upgrade to the iPhone 5 and turn in older models, people with knowledge of the plans said. 
 
 Apple has teamed up with Brightstar Corp., a mobile-phone distributor, to run the exchange program, said the people, who asked not to be identified because Apple hasn’t publicly announced the plan. 
 
 Brightstar also handles trade-ins for AT&T Inc. (T) and T-Mobile US Inc. (TMUS), as well as other carriers and device makers, amid brisk demand for refurbished iPhone 4s and 4Ss in emerging markets. By offering money for older smartphones, Apple Chief Executive Officer Tim Cook is seeking to entice consumers to upgrade to the latest models, part of the company’s efforts to reignite sales growth and combat declining shares. 
 
 “This will help them sell more phones, because it will lower the consumer’s out-of-pocket expense,” said Roger Entner, an analyst at Recon Analytics LLC in Dedham, Massachusetts. 
 
 Amy Bessette, a spokeswoman for Cupertino, California-based Apple, and Patrick Foarde, a Brightstar spokesman who works for Ketchum Inc., declined to comment. 
 
 AT&T is currently paying as much as $200 for working iPhone 4s and 4Ss, which could let some customers buy an entry-level iPhone 5 for no money down. Ganot estimates that 20 percent of U.S. consumers buying a smartphone this year will do so using a trade-in, up from 11 percent in 2011. 
 
 Photographer: David Paul Morris/Bloomberg A customer gets help from an employee at an Apple Inc. store in San Francisco. Close A customer gets help from an employee at an Apple Inc. store in San Francisco. Close Open Photographer: David Paul Morris/Bloomberg A customer gets help from an employee at an Apple Inc. store in San Francisco. 
 
 Refurbished Phones 
 
 Until now, Apple paid little attention to the refurbished iPhone market. That’s changing as Apple’s growth has slowed in recent quarters. Samsung Electronics Co. (005930) became the best-selling smartphone brand in the U.S. in May, T. Michael Walkley, an analyst at Canaccord Genuity Inc., wrote in a report this week. 
 
 Apple sold 37.4 million units of the iPhone in the latest quarter, compared with 35.1 million a year earlier. Apple shares have declined 38 percent from a record in September, weighed down by investor concerns that the company’s era of rapid growth, fueled by the 2007 debut of the iPhone, may be over. 
 
 While Cook has said some “game changer” consumer electronics products are in development, Apple is still trading at an 13 percent discount to Suwon, South Korea-based Samsung on a price-to-earnings basis, according to data compiled by Bloomberg. Apple shares rose less than 1 percent to $441.81 at the close in New York, leaving them down 17 percent this year. 
 
 Photographer: Tomohiro Ohsumi/Bloomberg By offering money for older smartphones, including iPhone 4S smartphones, seen here, Apple Inc. and the wireless companies are seeking to entice consumers to upgrade to the latest models, while profiting through resales abroad. Close By offering money for older smartphones, including iPhone 4S smartphones, seen here,... Read More Close Open Photographer: Tomohiro Ohsumi/Bloomberg By offering money for older smartphones, including iPhone 4S smartphones, seen here, Apple Inc. and the wireless companies are seeking to entice consumers to upgrade to the latest models, while profiting through resales abroad. 
 
 Emerging Markets 
 
 Samsung has become a market leader by offering smartphones based on Google Inc. (GOOG)’s Android mobile operating system, which captured 75 percent of the market in the first quarter, compared with 17 percent for phones running Apple’s iOS software, according to IDC. 
 
 Trade-in programs are used to support sales of new hardware in mature markets such as the U.S., where many prospective customers already own a smartphone. Used iPhones collected in the U.S. will only be resold in emerging markets, where Apple’s share is lower and demand for cheap devices is greater, said one of the people. That way, the resale of Apple’s older models won’t cannibalize iPhone 5 sales in the U.S., the person said. 
 
 Selling used iPhones in emerging markets may also keep first-time smartphone buyers around the world from committing to Android, buying time for Apple to introduce new models. 
 
 “The overall size of this market is increasing rapidly,” said Israel Ganot, chief executive officer of Gazelle Inc., an online mobile device trade-in company. 
 
 Global Demand 
 
 Apple runs a Web-based recycling service, in a partnership with Roseville, California-based PowerOn Services Inc., offering to pay people for their used iPhones, iPads or Macs. The new trade-in program with BrightStar will only be available at Apple’s retail outlets, letting consumers receive payments instantly and avoid the hassle of shipping their older gadgets, the people said. 
 
 Apple also worked with Brightstar to help AT&T and T-Mobile with their recent trade-in promotions, said the people. Brightstar set up its trade-in division a year ago and is on track to buy and resell more than 15 million devices this year, according to Bela Lainck, president of the buyback and trade-in business at Miami-based Brightstar. 
 
 The company collects 80 percent of its used devices in the U.S., and resells most of them through distribution centers in 50 countries, Lainck said in an interview in late May. Brightstar also owns an auction house in Hong Kong, and a division that provides refurbished phones to insurers seeking inventory for clients who have lost or broken a smartphone. 
 
 Installed Based 
 
 “The iPhone is an iconic device that people around the world want to own,” said David Edmondson, CEO of eRecyclingCorp, another trade-in processor. “If they can’t afford a new Mercedes, they’ll get a used one.” 
 
 Getting more people to buy iPhones -- whether new or used - - is also becoming more important as Apple starts to introduce services that are delivered via mobile devices, according to Walter Piecyk, an analyst at BTIG LLC. 
 
 Cook, who has also hinted that new services were being developed in addition to new hardware, is planning to introduce a new music-streaming service at Apple’s annual developers’ conference in San Francisco on June 10, people familiar with the matter said this week. 
 
 “The key is to get iPhones into as many people’s hands as possible,” Piecyk, who is based in New York, said in an interview. “Selling used phones is one way to do that.” 
 
 To contact the reporter on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net 
 
 To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net ||||| For the first time ever, Apple will let users trade in their old iPhones for new ones, according to Bloomberg's sources — an indication of just how much the company's market positioning has dwindled the launch of the iPhone 5... and the re-birth of Samsung's mobile dominance. Those looking to get rid of their iPhones will soon be able to head into Apple stores and turn them in for a discount on a newer model. It's a pretty sweet set-up for someone who has an old iPhone and wants a new one. But it's also a genius plot for Apple to increase their market share in the places it most needs help. 
 
 First, Apple gets to retain those loyal customers already using an iPhone — you know, the ones who see that fancy Samsung Galaxy S IV with its big bright screen and think they want to switch. Apple has never had to give customers an incentive to buy a new version of the iPhone, and it's never had to run an exchange program like so many cellphone providers have for years; then again, Apple's never faced competition like it is from Samsung right now. Either the upgrade incentive was obvious — of course an iPhone 3G owner would get the iPhone 4 — or most self-respecting dumb phone owners getting into the market would choose an Apple phone over the other options. But even since the iPhone 5 hit the market in September, those expectations have changed wildly: The iPhone has been losing user loyalty while Samsung has kept gaining on Apple. A recent report found that Samsung passed Apple in the U.S. cellphone market — at least for now. That could all change once Apple announces another new phone — people tend to hold off on upgrades until the next big unveil out of Cupertino. But with the walls starting to close in a bit, it won't hurt for Apple to start nudging people in that direction. 
 
 Second, the new trade-in plan reflects Apple's attempt to position itself in emerging markets, where your average cellphone customer doesn't want to spend upwards of $200 on a device. In addition to the rumored cheap iPhone, which looks more alive than ever with Apple's Foxconn breakup, the upgrade program is a great way to get lower-priced devices to people who want them. The used gadgets will only be sold in countries with demand for a cheaper set, the sources told Bloomberg's Peter Burrows. The older models won't be used as replacement devices for customers with broken iPhones, a practice that angered consumers in China so much that Apple changed its warranty policy there. This latest ploy, which won't be available at your local provider store, is just another way Apple could increase market share in those overseas markets, where it hasn't had as much success because the iPhone remains just too damn expensive. 
 
 Want to add to this story? Let us know in comments or send an email to the author at rgreenfield at theatlantic dot com. You can share ideas for stories on the Open Wire.
– You know that ancient iPhone 4 from 2011 that you're still saddled with? Well, multiple sources tell Bloomberg that you'll soon be able to trade it in for a discount on the shiny and (relatively) new iPhone 5. It's the first time Apple has allowed such a thing, notes Rebecca Greenfield on the Atlantic Wire; she thinks it's a result of just how much Apple's market positioning has dropped lately—and how scared it is of Samsung. Under the program, said to launch this month, Bloomberg predicts that customers with working iPhone 4 or 4S models may be able to get a basic iPhone 5 for no money down.