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Apple Club to open shop

Macworld Expo Apple makes its first foray into Internet commerce with the Apple Club site. Members will get easy access to software upgrades and discounted products.

Macworld Expo SAN FRANCISCO--Apple Computer today announced its first foray into Internet commerce with Apple Club, a new service that will offer Mac users easy access to software upgrades and discounted products.

As reported by CNET last week, membership will cost $20 annually. The strategy is akin to a buying club such as Price Costco, where consumers pay an annual fee to get a discount on products. Apple Club initially will open in the United States, but it eventually will be offered internationally.

"The Apple Club is the first step in our e-commerce strategy," said Philippe Bouissou, Apple's director of Internet commerce. Discounts will include 20 percent off Apple Care, an extended warranty program for Apple computers, as well as an electronic newsletters, CD-ROMS, a monthly message from Apple chief executive Gil Amelio and a drawing for Apple products, such as a Messagepad 2000.

"Search fast for what you need, and download right from your browser via the Club's 'diamond lane' high-speed servers," the club's membership form said.

Some Mac users complain that it is too hard to download upgrades from Apple's Web sites because demand often exceeds server capacity. The company's server has been upgraded to help mitigate that problem, however. This weekend, the company added a DS3 line to increase the capacity of its network, the sources said.

That may help dampen concern by some consumers that, with Apple Club, they will have to pay for services that now are free.

Some Mac users have speculated that the Internet store will sell third-party hardware and software products. Apple executives didn't deny this, but they cautioned that it would only occur down the road and that it would complement, not replace, traditional sales channels.

"We'll take our Internet traffic to our third-party partners," Apple Senior Vice President Mike Dionne said this evening.

Analysts see the online store as a way to combat the shrinking shelf space for Mac products in most retail outlets. The company has been muscled out by companies such as Microsoft.

A recent filing with the Securities and Exchange Commission disclosed that Apple's market share has shrunk. The company's share of worldwide PC shipments fell to 5.4 percent from 8.7 percent a year ago. Domestic share dropped to 7.3 percent from 13.2 percent last year.

Apple has opened an Apple Club in Hong Kong that is free to members. It provides a monthly newsletter, and offers information about new product releases, upgrades, and special events. The program is unrelated to the e-commerce Apple Club, however.