The iPhone as International Currency

Vernon Silver is a reporter for Bloomberg News based in Rome, and when an Italian worker heard he was visiting the U.S., she asked Silver if he could pick her up a gold unlocked iPhone 5s. She didn’t want the phone for her own personal use — she wanted to resell it back on the Italian market for a small profit:

It started by accident in December, during a business trip to New York. I live in Rome, where domestic work comes cheap and technology is expensive. An unlocked, gold, 32-gigabyte iPhone 5s that costs about $815 with tax in the U.S. goes for €839 (about $1,130) in Italy, roughly a month’s wages for workers who do laundry, pick up kids from school, or provide care for the elderly. When one worker heard I was visiting the States, she asked me to pick her up an iPhone in lieu of the equivalent cash for work she’d done. Lining up inside the Apple Store on Fifth Avenue, I was surrounded by shoppers speaking languages from around the world. The salesman looked stunned when I said I wanted an unlocked iPhone. Just one?

A new shipment of unlocked 5s phones had just come in, he said, adding that the gold model I asked for was the most popular in Europe and the easiest to resell. To my right, a man with a credit card from a Saudi bank was trying to buy his third and fourth phones of the day. “Make it two,” I said. There was one more step: The salesman grabbed a landline from behind the counter to connect me with my bank’s antifraud department. Purchases from this store, he said, are red flags.

In financial terms, this is known as arbitrage, or taking advantage of price differences in two or more markets. Bloomberg Businessweek has a chart of the going-rate for an unlocked iPhone 5s in various countries — the most expensive being Brazil at $1,196, including taxes. It is kind of mind-blowing that there are people out there willing to spend $1,200 on a cellular device! Vernon has since gone to another Apple store to buy an unlocked iPhone to resell overseas. “Walking in felt like a visit to an ATM,” he wrote.

Photo: Ashok Govind

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