Just released: Our latest Sports Collectibles Market Report!
This article was featured in our newsletter, Alts & Ends. Click here to subscribe for free and receive the best collectible market insights straight to your inbox on a weekly basis!
There is one more thing....
It's a feature we came up with for our new iPhone. It's really cool and super easy to use.
If you leave that iPhone sealed in its box, we've designed it to grow in value by 45% annually over the next couple of decades. It's a money printing machine, no accessories required.
That's how Steve Jobs could've ended the product launch for the original iPhone. Of course, if he had done that, nobody would've taken them out of the box, they wouldn't be rare, and that "feature" would've been a bust on par with the Newton.
Even the visionary Jobs might not have foreseen a $190,373 price for a sealed first-generation iPhone all those years down the line. But that's exactly what one sold for at LCG Auctions on Sunday evening, tripling the prior record.
Over 16 years, that small box containing a piece of technological magic appreciated at an astonishing rate of 45% annually. If you had put $499 in Apple stock on release day (June 29, 2007) and held it until Sunday, reinvesting dividends, you would have ended up with approximately $25.5k and a "feeble" annual return of 28%.
Before Sunday's result went stratospheric, sealed iPhones were already on a breakneck trajectory over the last year. In fact, here's how quickly things have evolved. In our very first edition of Alts & Ends, almost a year ago now, the lead story was a sealed iPhone selling for just over $35k. Fast forward six months, and we were writing about how a PetSmart manager named Karen Green consigned a first-gen iPhone that sold for $63,356, having been gifted the AT&T-exclusive device but sticking with Verizon back in 2007.
So, five months on from that record-breaking sale, how did the price chart so quickly become a hockey stick? Let's get the first factor out of the way quickly. This particular iPhone was the 4GB variant. That option was less popular, as it offered half the storage of the 8GB model for only $100 less. As a result, after launching in June, it was discontinued by September. That means there were far fewer of them in circulation, and even fewer survive in sealed condition today. No other 4GB example has been sold at auction to date, while all of the record-breakers thus far had been 8GB models.
That rarity matters, playing some role in the massive sale price. However, rarity on its own isn't that interesting. We're not nostalgic for a cell phone with 4GB of storage (even though that's a hilariously small amount - like one weekend's worth of dog pictures on my wife's phone). The 4GB isn't held in some elevated esteem in our memories relative to the 8GB. They were released at the same time, they're effectively the same phone, but one flopped, so there are fewer of them. Suffice it to say: the storage size was not the only driving factor behind the result.
No, it was the provenance that lifted the price ceiling and left bidders happy to engage with fewer inhibitions. You see, the problem with sealed iPhones (and really most sealed technology products) is there's minimal confidence in authenticating the product and its undisturbed nature. While enterprising grading companies are entering the fray, that seems more opportunist than it is a true offering of expertise and knowledge. Where is the incontrovertible evidence that this "sealed" iPhone is exactly as it was in 2007 when it rolled off the assembly line? Could crafty bad actors not replicate the appropriate seal structure, including seam details and tightness? How do we even know what the appropriate structure actually is? Where is the source of truth for comparison?
Absent more concrete reasons for certainty around authenticity, provenance becomes of paramount importance. The Karen Green story was believable, logical, and clean enough, but it pales in comparison to consignment direct from a member of the original engineering team at Apple when the iPhone first launched. Skeptics, we hear you; that doesn't make the authenticity impenetrable, but it goes a long way in a category with little else to lean on.
Now, here's where you might argue the case for provenance as the driver weakens: an original, sealed 8GB iPhone sold in the same event on Sunday for $53,725, about $10k lower than the record price for a like example in February. This phone was consigned by Phil Martino, director for Steve Jobs and Apple's product launches for the duration of Jobs' second stint at the company. He directed the MacWorld keynote where the iPhone was introduced, and Apple gifted him the phone in appreciation. As provenance goes, that's right up there.
However, there are two factors hindering the performance of the lot: 1) bidding on the 4GB model likely cannibalized activity on this one, and 2) it's in lesser condition, including a noticeably looser, more worn seal, wear on the corners, and a rabbit ear on the back label. The hype cycle in the lead-up to the event certainly swept up the 4GB model, perhaps leaving the 8GB overlooked, and in tandem with markedly worse condition, that's difficult to overcome.
The condition of the $190k iPhone bears mentioning as well. By comparison, Phil Martino's and especially Karen Green's look like hot trash.
Ultimately, this remains a market fraught with risk, and the massive and widely-publicized result will only encourage both bad actors and unwitting bidders. Absent bulletproof provenance and authenticity, most people will probably be better off with AAPL stock than with first-gen iPhones, especially at a six-figure cost basis. Anyways, check back in 20 years to see how sealed, first-generation Apple Vision Pros are performing. $3,499 might seem exorbitant even then.
Enjoyed this article? Don't forget to subscribe to our newsletter to receive more like it in your inbox weekly!
Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
