iPhone 5 Creates Trade-in Frenzy

NEW YORK (TheStreet) - Weeks before Apple's(AAPL) iPhone 5 was rumored to be officially announced, Josh Kwolinski was already prepared.

The student and part-time AT&T(T) employee from Sacramento, Calif. had traded in his iPhone 4 to an online reseller called Gazelle, which offered him $300 for the device. He plans to use the funds to purchase Apple's fifth generation smartphone after its launch on Oct. 4.

"I'm an Apple nerd," Kwolinski said. "I deal with phones all day every day and constantly see problems with other phones, but not the iPhone."

Kwolinski is just one of thousands looking to trade in their smartphones in anticipation of the iPhone 5 release.

The device, expected to be a lighter, slimmer version of its predecessor with a better camera and faster processor, has created frenzy among consumers who are ditching their old phones in droves.

Gazelle, a Boston-based consumer electronics reseller, has seen a 20% increase in smartphone trade-ins across all platforms in the last three weeks when rumors about the iPhone 5 launch date started circulating.

Used iPhones have gained the most traction, said Gazelle's chief gadget officer Anthony Scarsella, who has seen trade-ins double within the last two weeks.

In the last week alone, around 4,500 people tried to sell their iPhones, up nearly 30% from the prior week. And after press invites for the iPhone 5 launch event in Cupertino, Calif. started circulating across the Web, one iPhone was being traded in on Gazelle every 10 seconds.

"It's been a lot more aggressive this time than when the iPhone 4 launched," he said. "There's been more hype around the phone since it got delayed."

Gazelle predicts more than 20,000 people will try to sell their used phones on the site following the iPhone 5's launch -- more than 10 times what it saw with the iPhone 4.

Gazelle, which pays consumers around $170 for a 32GB iPhone 4 in good condition, is just one of several sites looking to help consumers sell their unwanted electronics like phones, digital cameras and laptops. Smaller companies like Billerica, Mass.-based NextWorth and Ann Arbor, Mich.-based ReCellular have joined the fray, while giants like eBay(EBAY), RadioShack(RSH) and GameStop(GME) have also launched trade-in programs.