Profiteers flipping iPhone 6 units to Chinese reportedly to blame for fight at Apple Store

Posted:
in iPhone edited September 2014
A combination of iPhone 6 launch supply constraints and a modified international rollout schedule have reportedly resulted in a fistfight at a Connecticut Apple Store, where out-of-town groups looking to profit on gray market resales vied for the short-stocked smartphone.



While profiteers are not an uncommon sight at Apple's product launches, multiple reports over the weekend described an increase in iPhone-flipping operations for the latest iPhone 6 and 6 Plus, including well-organized buying groups.

With no release date announced for China, which was included in the iPhone 5s rollout in 2013, customers in the country eager to get their hands on the latest iPhone 6 and 6 Plus are paying top dollar for handsets sold in one of Apple's nine launch countries. A report last week claimed Apple had received one of two Chinese regulatory certifications to start sales in the country, but a firm date has yet to be announced.

The unique circumstances surrounding this year's launch have created a small cottage industry for iPhone resellers and according to Bloomberg, tensions are running high. The publication on Monday reported about a fistfight that broke out between two groups of organized iPhone flippers at a Connecticut Apple Store. Local police said more than a dozen people from two rival New York operations came to blows over a spot in line, leading to the arrest of three individuals.

Those involved in the altercation planned to buy the iPhone 6 or iPhone 6 Plus, then resell the smartphones to customers in China, said New Haven Police Department spokesman David Hartman.

"It's our understanding that the markup on these phones when they're resold in China can be upwards of 300 percent," Hartman said. "For the most part, the dozens and hundreds of people who are waiting in line are just doing that."

iPhone 6, 6+


On Saturday, filmmaker Casey Neistat posted to YouTube a video documenting the scene outside a New York Apple Store on the eve of launch. In the short film, a large number of line-waiters -- including the first woman in line -- were seen purchasing two off-contract iPhones in all-cash transactions, only to immediately hand them over to an unknown figure outside the store. Later shots showed these intermediaries carrying satchels full of iPhone 6 units presumably bound for resale on the gray market.

It should be noted that while the piece concentrated on line-waiters of Chinese descent, many of whom did not speak English, the issue is in no way limited to this demographic.

AppleInsider received unconfirmed reports over the weekend describing identical scenes in Australia, New York and other major metropolitan areas.

In one case observed first-hand, a group of at least 15 people stood in line on launch day with the express intent of buying and reselling iPhones to overseas customers. The operation was organized by a single ringleader located in Cambodia who hired a stateside underling tasked with gathering bodies for a large-scale buy of at least 30 units.

Individuals in the group were supplied with new American Express credit cards and a list of iPhone 6 choices from buyers assumedly living in an area where the iPhone 6 is not yet available. A look at one list showed 16GB models from AT&T and Verizon were first picks because tax on higher-capacity models cut into profits. Following purchase, the cards were gathered along with the merchandise. Members of the group denied requests for comment.
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Comments

  • Reply 1 of 99
    I know there is no way to stop this. But it does artificially constrict the supply to those actually using the device in that launch market. I wish that there was a limitation to where the device purchased in said market must be activated in that market. Also, China Mobile uses a different LTE version then any other carrier. So presumably these devices would not even work on that carrier. It's really to bad that China was not in the launch day markets list. I wonder who is to blame for that? I have to assume that Apple worked as hard as they could to make sure China was on that list so that leaves the regulators in China?
  • Reply 2 of 99

    No no no... this story has it all wrong.

     

    How do I know?

     

    One of our fellow members told us definitely absolutely for sure that these tactics and this market do not exist.

  • Reply 3 of 99
    rorwessels wrote: »
    I know there is no way to stop this. But it does artificially constrict the supply to those actually using the device in that launch market. I wish that there was a limitation to where the device purchased in said market must be activated in that market. Also, China Mobile uses a different LTE version then any other carrier. So presumably these devices would not even work on that carrier. It's really to bad that China was not in the launch day markets list. I wonder who is to blame for that? I have to assume that Apple worked as hard as they could to make sure China was on that list so that leaves the regulators in China?
    I figure that too, just also to note, people don't necessarily need it first, why not wait till next week when the amount of countries triples and see from there, obviously Apple is trying to make the process smooth by making it where it's quick(4 months is goal) but delivered at constant rate so it's devices don't get sold out 3 months on launch day and it's really sold out 1 month and that is likely a constant across the whole launch set.
  • Reply 4 of 99
    apple ][apple ][ Posts: 9,233member

    Organized Chinese scalping? Who would ever have imagined such a thing?<img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    Only a racist would ever claim such a thing (or any observant person with two functioning eyes and ears who has seen one of these lines.):smokey:

     

    I stood in a few lines for an iPad 2 a few years ago, but I wont be standing in any more lines, especially since you can now preorder online.

     

    It's also not fun to stand in line with people who are not Apple users and who are not Apple fans.

  • Reply 5 of 99
    Quote:

    Originally Posted by RORWessels View Post



    Also, China Mobile uses a different LTE version then any other carrier.

     

    The Sprint version is the China version, because both are deploying TD-LTE.

  • Reply 6 of 99
    malaxmalax Posts: 1,598member

    It's interesting that this is occurring, but let's not overstate it's significance.  Of the 10 millions phones sold so far, how many went to one of these scalping rings?  1%?  5%?  Big deal.  Anyone complaining that they couldn't get a phone because of this (unless they were literally in line and couldn't get one) needs to just chill out.

     

    And why didn't Apple include China in the opening roll-out?  Probably because all that would have done is piss off people in every country when initial supplies ran out twice as fast.  Better to tell the Chinese market to wait a while (when supply can catch up with demand in the rest of the world) rather than just having even worse supply problems everywhere.

  • Reply 7 of 99
    It's my understanding that the only "off contract" phones available on day 1 were the ones from T-mobile and that they were locked to TM for something like 45 days.

    If people were buying AT&T or Verizon phones for resale in China how were they getting around having to activate them on those carriers?
  • Reply 8 of 99
    pmzpmz Posts: 3,433member

    No way to stop international scalping unless Apple can get regulatory approval before launch.

     

    No way to stop domestic scalping, unless Apple starts actually making enough devices to meet demand. But then again, creating scarcity is one of the things they're best at. Oh yeah, they had "no idea" that everyone wanted a Gold 5s at launch last year. Right.

     

    I'll give you each one guess on exactly how many ****s are given by Apple, about scalping. One guess.

  • Reply 9 of 99
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by calfoto View Post



    It's my understanding that the only "off contract" phones available on day 1 were the ones from T-mobile and that they were locked to TM for something like 45 days.



    If people were buying AT&T or Verizon phones for resale in China how were they getting around having to activate them on those carriers?



    What makes you think any one of these "buyers" thinks that far ahead?

  • Reply 10 of 99
    Quote:
    Originally Posted by RORWessels View Post



    I know there is no way to stop this. B

    There is a VERY EASY way to stop it and it's already built-in into iOS... ACTIVATION LOCK.

     

    The moment you buy it, it becomes locked and this initial lock stays for say 2-4 weeks until the landrush is over. I really wish Apple would consider doing this for our sake.

     

    Done.

  • Reply 11 of 99
    apple ][apple ][ Posts: 9,233member
    Quote:
    Originally Posted by pmz View Post

     

    But then again, creating scarcity is one of the things they're best at. 


     

    You're venturing into Fandroid conspiracy territory right there.

     

    There is obviously a limited amount of phones that have been manufactured at the time of the launch date. Apple had many, many millions of phones, and obviously the demand is greater than the supply. Do you expect Apple to delay the launch by 3 months, so that they can stock 50 million phones?

     

    Also, there is a way to stop some of the scalpers. Apple had implemented it before, but they bowed to PC pressure and they do not have that requirement anymore. I am talking about making cash illegal and requiring a credit or debit card with ID. That would stop most of the scalpers, and make things harder for them. It would also stop each person from buying more phones than they are allowed, since their names would be on file.

  • Reply 12 of 99
    Samsung CAN NOT buy this kind of publicity! They can only mock it, but can NEVER duplicate it. Try and copy that shamsung.
  • Reply 13 of 99
    sflocalsflocal Posts: 5,463member
    Quote:

    Originally Posted by Krawall View Post

     

    There is a VERY EASY way to stop it and it's already built-in into iOS... ACTIVATION LOCK.

     

    The moment you buy it, it becomes locked and this initial lock stays for say 2-4 weeks until the landrush is over. I really wish Apple would consider doing this for our sake.

     

    Done.




    While I think it's rude what the Chinese scalpers are doing, and my taking away inventory from folks that live in that area... technically, they are not doing anything illegal.  How many U.S. folks are taking their iPhones on day 1 and putting them on EBay?  



    Sure, it would be nice to have the lines populated by direct fans, but it is what it is.  What next?  Make sure the buyers can speak clear English before allowing them to buy an iPhone?

  • Reply 14 of 99
    Calfoto - you're incorrect. The T Mobile variant is only locked to T Mobile if you bought it from T Mobile directly or bought it from Apple and then activated on T Mobile's network. I bought the T Mobile iPhone 6 128gb on launch day and didn't it in the store, and brought it home, and immediately replaced the SIM with a Cricket Wireless SIM and I've been using it on their network since without issue.

    Consequently I believe the Verizon variant is also unlocked for overseas GSM networks, and if bought and not activated on Verizon, would be abler to use the US GSM networks as well.
  • Reply 15 of 99
    Quote:

    Originally Posted by sflocal View Post

     



    While I think it's rude what the Chinese scalpers are doing, and my taking away inventory from folks that live in that area... technically, they are not doing anything illegal.  How many U.S. folks are taking their iPhones on day 1 and putting them on EBay?  



    Sure, it would be nice to have the lines populated by direct fans, but it is what it is.  What next?  Make sure the buyers can speak clear English before allowing them to buy an iPhone?


    Same thing as for the ones putting it on eBay - they'd be blocked from the activation lock as well. But without blaming it all on the chinese, they add a new dimension to it. One guy buying one phone and selling it off more expensive is a small thing, hundreds of guys swarming the shops and taking off massive inventory is another thing.

     

    It reminds me to the PSP launch many years ago - a Sony rep tried to interview the first buyers but he failed because none of the first buyers were japanese - they were (surprise) all mainland Chinese.

     

    Is this all legal? NOT SURE. If you buy and sell, then you're trading. So most likely what they are doing is not legal because none of them pays taxes (I assume) or employs the buyers officially (I'm sure), and do you ask them if they get health benefits? 

     

    Seriously, I'm not one who's playing this down, joke aside with the health benefits, but this is a big problem. Yes, it's illegal, yes it's a big nuisance and it freaks me out because they rip money off end consumers.

  • Reply 16 of 99
    apple ][ wrote: »
    Organized Chinese scalping? Who would ever have imagined such a thing?:lol:

    Only a racist would ever claim such a thing (or any observant person with two functioning eyes and ears who has seen one of these lines.):smokey:

    I stood in a few lines for an iPad 2 a few years ago, but I wont be standing in any more lines, especially since you can now preorder online.

    It's also not fun to stand in line with people who are not Apple users and who are not Apple fans and who don't even speak English.

    White people are the devil.

    Please. Scalpers can also be white, black, brown. Just check eBay out. I'm sure people list the iPhone 6/6 plus on sale because they accidentally bought another one or changed their minds instead of returning them.
  • Reply 17 of 99
    pmz wrote: »
    No way to stop international scalping unless Apple can get regulatory approval before launch.

    No way to stop domestic scalping, unless Apple starts actually making enough devices to meet demand. But then again, creating scarcity is one of the things they're best at. Oh yeah, they had "no idea" that everyone wanted a Gold 5s at launch last year. Right.

    I'll give you each one guess on exactly how many ****s are given by Apple, about scalping. One guess.

    'Creating scarcity'?

    Don't parade your utter abject ignorance of what real-world manufacturing, logistics, and marketing entail.
  • Reply 18 of 99
    zoetmbzoetmb Posts: 2,579member
    Limit phone sales to one or two in the opening weeks until there is enough inventory to anyone who isn't renewing a phone plan. If someone wants another phone, they have to wait on line again.
  • Reply 19 of 99
    Quote:
    Originally Posted by jungmark View Post



    Please. Scalpers can also be white, black, brown. Just check eBay out. I'm sure people list the iPhone 6/6 plus on sale because they accidentally bought another one or changed their minds instead of returning them.

     

    I prefer to trust my own two eyes, and the lines that I have seen are majority Chinese.

     

    Of course different sorts of scalpers can be found, I am merely stating that the overwhelming majority of the scalpers that I see are Chinese.

     

    I also sent my first and only email to Steve Jobs a few years ago, telling him about the Chinese scalping problem in NYC. 

  • Reply 20 of 99
    kpomkpom Posts: 653member
    calfoto wrote: »
    It's my understanding that the only "off contract" phones available on day 1 were the ones from T-mobile and that they were locked to TM for something like 45 days.

    If people were buying AT&T or Verizon phones for resale in China how were they getting around having to activate them on those carriers?

    The T-Mobile versions bought direct from Apple are unlocked. I bought one to use with AT&T. I'm posting from it right now. I did get an SMS to change my SIM but that took 10 minutes at an AT&T store Friday evening.

    Also, the Verizon phones are all unlocked. Apple Stores will sell them device only, even if Verizon itself won't.
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