Why was a previous generation iPhone with a busted screen worth so much on eBay?

Several months ago an acquaintance I help with tech stuff from time to time gave me a 16GB 3rd generation iPhone (the one just prior to the iPhone 4) to use, destroy or tinker with as I wished. The casing had a good accompaniment of normal use dings and scratches, and it had a shattered screen. Interestingly the touch capability still worked perfectly over the 40% or so of the screen surface that was not shattered. All other functions of the phone worked fine.

I threw it in a drawer not thinking it was even worth my time to list it on eBay until I was bored and checked out the sold prices for broken iPhones and was shocked. Long story short I listed it, it was bid up ferociously, and it sold for around $240+shipping. This is not an exception due to my mad listing skillz, many similar busted screens iPhones sell for similar prices.

I have to admit I’m still curious about why anyone would pay this kind of money for a busted last generation iPhone? Why are they so valuable?

Because nearly all phones don’t sell at their real price. You get discounts because of two year commitments. Used iphones regularly sell for $200+ because the actual price is $500-1k.

Also, as a WAG, I suspect the iPhone is not available in all countries, or might be far more expensive than here.

Superhal is correct. The price of a 16 gig iphone 4 without a contract is $650 with a 2 year contract it is $200. The price of phones without contracts are in my opinion higher than they might be if people in the US bought more phones without contracts.

Plus the new iPhone 4 uses a mini-sized SIM card, so earlier iPhones might be more sought-after if you only have access to a regular SIM card.