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iPad 2 Rollout Leads to Massive Deflation in Secondary Market

If you’re planning to trade in your old iPad for a shiny new iPad 2, you aren’t alone. In the hours after the iPad 2 announcement, thousands of iPad users have headed for the web to sell off their tablets of yesteryear.

This frenzy — coupled with Apple’s decision to drop the price of the original iPad to help clear out inventory — has had a drastic impact on the secondary market. That makes this a prime opportunity for savvy buyers to get a good deal on last year’s iPad.

Earlier this afternoon, reCommerce company Gazelle started promoting its buyback prices for the six original iPad units. The original prices offered sellers 70 – 75% of the original purchase price for a unit that included original accessories and in “like new” condition. Within hours, the company was forced to lower its trade-in quotes (users that managed to lock in their prices early are not affected), thanks to the price drop and significant interest in trade-ins.

Gazelle tells us that typically, a large number of device trade-ins in one day will drive prices down 3-5 days later. These market forces were perceptible with the iPad within hours. Gazelle estimates that in the first hour after the iPad 2 keynote, more than 2,000 individuals visited the site and started the trade-in process. Yesterday, the day before the keynote, only ten iPad units were submitted for trade-in the entire day.

Existing iPad owners can still use Gazelle to easily sell back their old iPads — but they can expect to get a lot less. At the time of this writing, a 16GB Wi-Fi iPad will fetch $300 from Gazelle. That’s compared with $375 earlier today. A 64GB Wi-Fi and 3G iPad went for $595 right after the keynote (disclosure: I sold my own iPad via Gazelle for this price) and now fetches $510. A 32GB Wi-Fi and 3G unit that could be sold for $522 earlier this afternoon now commands $350 from Gazelle.

Meanwhile, we’re also seeing lots of iPad activity on eBay and Craigslist. Ebay’s Instant Sale site — which operates in a manner similar to Gazelle — is still reporting comparably high buyback prices.

This new secondary market is great news for consumers who might want a way to get an iPad in the sub-$400 range. Being a year old doesn’t change the fact that the original iPad is a fantastic gadget.

iPad owners, let us know in the comments if you plan to trade in your old model for an iPad 2. If you are considering a trade-in, where do you intend to sell your device?

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