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Apple plays up .Mac subscriptions

The company says 100,000 people have signed up for the online service. That pales in comparison with the 2.5 million for the earlier iTools service.

Apple Computer on Tuesday revealed that 100,000 people had signed up for the company's .Mac online subscription service.

But the number pales in comparison with the estimated 2.5 million people who subscribed to the earlier, free service, known as iTools.

In July, Apple announced it would phase out the free iTools service and replace it with .Mac, which would cost subscribers as much as $99 a year. Existing subscribers have until Sept. 30 to take advantage of a $49 .Mac promotion.

The change caused quite a stir in the Mac community, which showed some resistance to the switch to paid services from those that had been available for free.

An online petition, ".Mac Services Overpriced Concerns," has garnered nearly 34,000 signatures since mid-July.

"Apple's move into paid subscription services will be slow on the uptake," said Jupiter analyst Michael Gartenberg. "The lack of a slow transition into the new model, and removing all free aspects of the service, has not gone over well in the core audience. Apple would be wise to at least let users keep their .Mac e-mail address at a much lower cost and then try to transition the user base over time."

In July, Apple noted that the retention rate when moving to paid services from free ones is typically around 10 percent. The current number of subscribers would put the company well below that level, or under 5 percent.

The company noted on Tuesday that about 1,000 people a day are signing up for .Mac. The 100,000 tally of .Mac subscribers counts only those who have paid for the service; an additional number undisclosed by Apple has signed up for a free trial to .Mac.

Still, with .Mac, Apple significantly increased the services available compared with iTools and tied a number directly to new applications or aspects of Mac OS X. The new service adds Virex antivirus protection and Web-based e-mail. Online storage jumped to100MB from iTools' 25MB. The .Mac service also comes with online backup, a Web-based address book and online greeting cards.

New "i" applications iCal and iSync also tie directly to .Mac. People with .Mac accounts can use iCal to publish their calendars online to share with others. They can either view the calendars directly or subscribe to them, receiving updates via e-mail. Apple released the desktop calendaring program last week.

The forthcoming iSync also features a Web-based component available to .Mac customers. On the desktop, the software can be used to synchronize contacts and calendars with the iPod digital-audio player, Palm devices and some Bluetooth-enabled cell phones, such as Sony Ericsson's T68i. But iSync also can be used to synchronize data between two computers using a .Mac account.

Apple's Mac OS X 10.2 also ties into .Mac through a number of features. People with .Mac accounts can, for example, share digital photo slide shows with other account holders. The slide shows download into the operating system's screensaver.

Apple expects to release the first update to Mac OS X 10.2, also known as Jaguar, later this week.

While .Mac sign-ups may be progressing slowly, the move to paid services also is the right thing to do, say analysts. The entire PC industry is gripped by slow sales that could hit Apple hard, unless the company more aggressively embraces sales of software and services.

Market researcher IDC predicts that worldwide PC shipments will grow a paltry 1.1 percent this year. Slow holiday sales, on the back of unseasonably slow back-to-school sales, could dim the forecast further.

Apple has opened up the possibility of adding more services through Jaguar's Sherlock 3, which offers a smorgasbord of Web search options, such as movie times, online auctions, flight information or translation services. Already, people can use Sherlock 3 as a conduit for buying movie tickets or digital images on the Web.

"It clearly makes sense to transition to paid services," said technology Business Research analyst Brooks Gray. "A large number of companies that were offering online services for free have gone out of business. We know that model doesn't work. Apple is enhancing its value proposition to customers by vastly improved software packaging capabilities through paid services."