Apple has extended the cut-off date for iTools account holders to October 14. After that date, existing iTools account and mac.com email addresses will cease to work unless they've been converted to the $100-a-year subscription software package .Mac. The $49.95 introductory offer has also been extended.

Apple recently claimed that 100,000 iTools subscribers had already ponied up: a ten per cent success rate, according to some estimates.

Which is good for Apple in the short term - it means $5 million extra revenue right away, and $10 million extra additional annual income; but it's a marketing disaster in the long term, and we'll explain why.

But before we do, it appears that the refuseniks are already causing chaos. Organizers of the MacExpo 2002 show in London posted this reassurance on the site recently:-

"Don't panic if you have pre-registered for tickets and used a mac.com email address. We recently sent you an email asking you to send us your new email address, if you haven't replied yet - please do so."

Oops.

So why is this new revenue stream a bad thing? In itself, it isn't. It's the missing members that are the problem, as they represent a significant opportunity cost.

Mailing lists are a valuable marketing commodity, but are often out of date, inaccurate, contain little additional demographic information and nothing to help the marketeer distinguish between a regular customer and a casual buyer.

The iTools database has none of these flaws. Using basic data mining, Apple can use this information to produce relationship maps, spending information and usage patterns that other companies can only dream about. It's pure gold and possibly the most valuable customer list in the world, ounce for ounce.

Companies employ market research agencies to quiz users and this is very expensive. They'll even pay you to gather this information, and then only get a small sample.

But Apple had it all, and threw it away. The company still has the same customer information, only a lot less of it than it had before. This is bad for Apple, and bad for Apple's potential iTools web services partners. Kodak for example, turns iPhoto snaps into prints, and through the revamped Sherlock, thousands more business relationships and new services could be forged. As web services grow, Apple will only be able to offer a fraction of the customers it should.

That $99.95 sub looks expensive to many of us, but when you calculate the cost of what Apple could be losing in the future if so many iTools subscribers decline to join .Mac, it doesn't even begin to cover it.

Now to paraphrase Oscar Wilde, to lose one market (leadership in education, to Dell Computer) is unfortunate, to lose two looks like carelessness. ®

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