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Apple launches iMac loan program

The firm hopes to keep momentum going for the hot new computer by offering it for $29.95 per month.

Seeing that demand for the popular iMac is tapering off somewhat, Apple Computer is trying to boost sales with a special loan program that has already been quietly launched for the holiday season.

While Apple enjoyed the "most successful launch of any computing product this year, only one month later the results of iMac sales are not showing significant long-term strength," Aaron Goldberg, vice president of ZD Market Intelligence, wrote in a report.

Goldberg said iMacs sold at the rate of about 20,000 per week after its mid-August introduction, but in September, the number dropped to less than 10,000 per week.

To counter the slide in sales volume, Apple is now offering iMac's for $29.95 per month through a financing program, as first reported by CNET News.com. As an added twist, customers apply for the loan online at a computer located in a retail store, say resellers who are participating in the program.

"Sales have been holding up, but this will make the iMac affordable for everybody," said Tony Violanti, vice president of Computer Town, which operates stores in Arizona, New Hampshire, and Massachusetts. "A dollar a day--that's a great way of positioning it. That's three pizzas a month," he said.

Apple will further attempt to entice consumers into a purchase by not requiring any down payment. Additionally, no monthly payments will be required for 120 days from the date of purchase. Interest will accrue during that time, however, and a loan origination fee of $54 will be charged.

In comparison, Dell Computer, the company which Apple's Steve Jobs said he is gunning for, offers a buying program in conjunction with Visa. Dell and Visa have a co-branded credit card that allows a customer to buy a computer with no money down and no interest for 120 days, with a lower fixed interest rate for the duration of the payback period.

Gateway offers a comparable interest rate and the ability to trade the system in at the end of the loan period. Compaq Computer, another company that Apple has used as a point of reference, does not offer any special loan or lease programs directly to consumers.

Apple also has offered up some modest modifications to the iMac to maintain interest in the curvy computer.

Some customers--such as those interested in games--may have been waiting in the wings because of the iMac's modest 3D graphics capabilities, but Apple said it is now including a more powerful graphics chip and three times as much graphics memory for improved performance. New systems are shipping with the recently released version 8.5 of the Mac OS now, as well as Adobe PageMill 3.0, which allows users to create and manage their own Web pages.

For the fiscal quarter just ended, Apple's year-over-year unit shipment growth outpaced the industry average, thanks in large part to the iMac, the company has said.

The iMac did fall slightly in popularity from its mid-August introduction, according to a report from PC Data. In retail sales, the iMac was the second-best-selling system in retail outlets in August, when it was available for only half the month, but slipped to third in September.

In both August and September, the best-selling box was a Pavillion PC from Hewlett-Packard powered by a K6-2 chip from AMD. Although pedestrian in looks, the HP machine with monitor costs less than the iMac.

The loan program, which will coincide with a revised marketing campaign, is expected to maintain sales through the holiday season without resorting to price cuts, a strategy that should help Apple's next earnings report.