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Wednesday, November 06, 1996 Iomega was up $1 9/16 Tuesday, closing at $22 11/16 (+7.40%). TODAY'S RECAP:On Tuesday Iomega confirmed to the world what readers of I/T were already aware of Monday morning; namely, that computer buyers are now able to purchase Gateway systems with external Zips or internal Jaz drives included. IOMG shares moved up sharply when this news hit the street about an hour before the close of trading yesterday... chalk up another OEM for Fooldom's most-watched company. Iomega's full press release is available to America Online users at Keyword: Market News. Besides Gateway, the topic du jour in the Iomega Folder continued to be digital photography. This speculative thread, which began Sunday night, continued into the wee hours this morning, with Fools wondering out loud what kind of photographic storage product Iomega might have under wraps. We caution readers that Iomega has not announced any such product, though IO's association with Kodak in its joint "Zips Across America" program is at least tantalizing. But be warned: This discussion of digital photography is based strictly on rumor and conjecture. INDEX: Use the Search or Find feature of your word processor to locate the article number (Find: 1++, 3++, etc.) -- or use AOL's Edit>>Find in Top Window Feature. If Find in Top Window is dimmed, just click on some text, anything, in the IOMG Today window and try again.
1++Arentz65 considers the rumored "Digital Video Tape" product, and casts
a skeptical glance at a suggested Zip-based digital camera storage
product. And now, the Best of the Board...Started 3 a.m. 11/5/96.
1+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: DVT & Mini-Zip Date: 96-11-05 16:25:16 EST From: Arentz65
<<<Product 1 is called DVT - Digital Video Tape. It may be able to store data as well as video. More info to follow. That is the big secret product. DVT not DVD.>>>
I don't get it. What do you think Ditto is? Analog? Audio and video tape are pretty much the last remnants of analog around. DAT as well as a few video formats (including Sony's new format) are digital. FYI: Ditto can store data and video now.>>>
Just wanted to add a comment to the above.
While Ditto can be used for backing up data It does not have a fast enough transfer rate(only 1-2Mbs) to record Video(at least with decent quality). Io could be coming out with a DVT for recording small to medium amounts of video. How this would sell and to who exactly I have no idea. Digital Camcorders already have their own tapes to record to. Would the DVT be an add on for them? If your digitizing video with your PC why not use a Jaz?
As for the Mini-Zip, I always thought flash memory cards would fill the digital camera storage need better than a magnetic disk technology could. Flash memory has not come down in price as much as i thought it would, so maybe io sees an opening. Just thinking of the miniaturization that would have to take place, the stabilization issues(Cameras get jostled a lot in while in use). The mini-zip for digital cameras seems a difficult proposition.
EA 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:IO/GATE Date: 96-11-05 16:35:39 EST From: Arentz65
Rich wrote
<<Remember we want the zip to be a standard - not an option. This is hopefully a first step. But you have to wonder what took Gateway so long.
Also note that Gateway is only offering external zips. Not even internal zips as an option.>>
Gateway is a build to order outfit isn't it? I would expect anything new to be optional for a long time. In fact i would expect it to be one of the last OEM's to go standard on any new equipment.
I think gateways build as you go approach also explains why It took them so long to get on board. If you offer an option that everyone wants you have to be assured of supply. While supply of external zips met demand awhile back maybe Gate wanted to be sure of the continued demand?
What does bothers me is why are they not offering the Internal? Are supplies still so tight on the Internals that Gate does not feel comfortable offering them?
Ea 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Flashcards and "Click!"? Date: 96-11-05 18:38:03 EST From: PKeeler
I checked on the price of flash card memory. Flash card RAM is a PCMCIA device that comes in sizes ranging from 5 MB to 40 MB. It is more expensive than I thought, outrageous actually. The average of several vendors comes to $34.95/MB; yes you read that correctly. A Zip disk is around $0.13/MB.
That's an astounding difference. If Iomega can make a mini-Zip that is fast enough, reliable enough, stores around 40 MB and costs $0.13/MB it could have a niche killing product on its hands. How big the niche is would depend. If this enables Kodak, or whoever, to then drop digital camera prices to below $100...it would be a huge niche!
Maybe when they give the President his pile o' Zips they will take his picture with a Kodak mini-Zip digital camera and post it at their web sites two minutes later. That would add an exclamation point to the Zips Across America promotion!
Ah to dream...how about a name: Click!...Snap! (already taken by Play)
PKeeler Patrick Keeler 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:DVT & Intel's Smart Video Date: 96-11-05 21:05:26 EST From: JonTara
<< Arentz65, thanks for asking this question. I'm totally puzzled about the technology and I'm curious if you, or someone else, could comment if it has any similarities with the new product that Intel announced yesterday.
Below are some snips:
<<<Nov. 4, 1996--Intel Corporation today introduced a personal computer enhancement product that lets PC users capture and compress video from ordinary sources like VCRs and camcorders, edit it on their PCs, and then store the video to a computer disk or send it out to the Internet.
...the Intel Smart Video Recorder III>>
This is the third generation of a product that Intel has had for several years. It's "video capture card". You should find several brands in your local computer store. It takes video in and digitizes and compresses it, saving it as an .avi file.
I happen to know a little bit about this technology, as I was one of the developers of the first PCMCIA video capture card. (PCMCIA = "those little cards that plug into notebook computers")
I'm afraid I don't understand the logic of Iomega entering the digital video tape market - there are companies with much more experience in this that already have digital camcorder products already out in the marketplace. The leading camcorder companies do not need Iomega, and the others are likely to adopt one of a couple of competing standards.
Iomega would face a HUGE uphill battle in the market - and they would be battling some of their own key OEMs from the computer market! 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Squeeze!!! Date: 96-11-05 21:33:03 EST From: MF Ben
<<< CGuy's plan is starting to come together! The Bull is on the attack!*>>>
Last I looked the plan was Iomega's. As much as I admire Bill's ability to post rumor (fastest post in the West) -- he has made it quite clear that he does not do any analysis -- I think Hill and Edwards and the rest of the Iomega employees should get most, if not all of the credit for the "plan". I wager even Bill would agree.
Moving on to some actual Foolish analysis -- those uninterested, please hit that right arrow button...
<<<ROY, Utah, Nov. 5 /PRNewswire/ -- Iomega Corporation (Nasdaq: IOMG) today announced that Gateway 2000, a worldwide direct marketer of personal computers, is offering its customers external Zip drives and/or preinstalled internal Jaz drives as options in certain system configurations.>>>
While the internal Jaz inclusion is excellent news and the implications of a formal relationship between Iomega and Gateway is certainly excellent news, the EXTERNAL Zip seems to strike me as somewhat funny.
Once can view it in one of two ways, depending on your propensity towards an balance as opposed to hyperbole...
First, I can chalk it up to a timing/engineering problem and see it as Gateway is worried that the lack of Zip cobranding with their products would hurt them in the holiday season. Due to the engineering of the current product line, including the 31" screen, infrared consumer electronic behemoth, Gateway just couldn't shoe-horn in a Zip and this, in the interest in including a Zip as fast as possible, went with the external model. They will, of course, be whipping those engineers so that the next model round has Zip in each and every one.
Or
Gateway can install an internal Jaz so engineering isn't a problem at all but they don't, because of the slim margins on internal Zips, want to bother with the expense of installing one for customers -- on the "built as ordered" models -- or doesn't want to take the risk of unsold inventory on the traditional already built models.
Either way, the lack of an internal Zip model certainly smells somewhat funny yet also akin to IBM's Q3 Iomega relationship. Whether Gateway and IBM's positions actually are similar cannot even be inferred, IMO.
I would also like clarification on whether the external Zip is ONLY available on "certain" models are is that qualification meant for the internal Jaz? Anyone get any more from Gateway?
Regardless, Gateway leaves only Compaq as a major OEM hurdle. Of course, Iomega must work very hard to increase SKU penetration WITHIN each OEM agreement, something that has been spotty at best (See Aptiva S series). Iomega now seems to have their foot in the door with enough of the heavyweights to actually take a seat next to Intel and Microsoft at the table. Let's see what they do with it.
The question, to me, is not when will Compaq sign on, but who will be (if any) the first OEM to put a Zip as standard on more than 50% of their SKUs.
Cheers,
Benjamin 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Flashcards and "Click!"? Date: 96-11-05 21:40:22 EST From: MF Ben
<<<It is more expensive than I thought, outrageous actually. The average of several vendors comes to $34.95/MB; yes you read that correctly. A Zip disk is around $0.13/MB.
That's an astounding difference. If Iomega can make a mini-Zip that is fast enough, reliable enough, stores around 40 MB and costs $0.13/MB it could have a niche killing product on its hands. >>>
PKeeler,
I don't think you can make an accurate comparison here. It would be similar to comparing RAM prices per meg to winchester prices per meg. Flash RAM is not meant to be a permanent form of storage except in a very small number of cases, including Newton.
FLash RAM is a temporary (and fast) holding bin. From flash RAM the material is usually dumped into another storage medium, such as Zip, jaz, hard drives, or other. Flash RAM's main advantage is speed and size. The lack (comparatively) of "moving" parts is also a distinct advantage. Operating a Zip at all angles, bouncing around, is definitely safer than a hard drive but nowhere close to as "jar-proof" as RAM.
In any case, I have a fundamental problem with your price comparison. I just don't think RAM, a temporary storage medium, and Zip, a more permanent storage medium, should be compared in that way. Many users only own as much flash RAM as necessary for their largest job (hence 10 megs) and no more. It will be constantly dumped and re-used.
Cheers,
Benjamin 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Some Random Thoughts Date: 96-11-05 21:51:31 EST From: WileEDog
A little rambling for a Tuesday night:
1) If I had a nickel for every short squeeze predicted on this board, I wouldn't need one.
2) The Gateway news is great, but as was posted before the news is about a year late. Gateway still doesn't sound all that enthusiastic about it, not offering any internals, and releasing the news two days after the fact. it will be interesting to see if they sell Zips "because everyone else is", but make no effort to promote it, or if they eventually take a cue from retailers and mail order companies like Mac- and Micro-Warehouse and make Iomega products a key selling point. The jury is still out on the effects of Gateway on IOM's bottom line.
3) Compaq. Best news in a while. It has been posted that this is the sole effort of little CFN, a peripheral maker for CPQ computers, and CPQ has nothing to do with it, and I think that's probably right. However, look at the big picture and the implications. If CPQ was really serious about the LS-120, why help create a situation for more Zip drives to be sold? CPQ easily has the leverage to squash any attempt by CFN to sell this thing, especially if CFN is a peripheral maker that relies on CPQ to exist, but they aren't, which means they are at least silently endorsing it. They surely realize the head start IOM has on the LS-120, why add to that lead if they don't have to? If you ever wanted an early initial sign that CPQ has given up on the LS-120, I think this may be it. Of course, I reserve to the right to be dead wrong.
4) Digital Tape. Scratching my head on this one. I just don't see where this fits in the market. Most people I know of who do digital editing use the Jazz, (or more often external hard drives - lots of 'em) and while Jazz drives and media are expensive, I don't know how much of a "low-end" market there is for this. I would rather this R&D money be put into making Jazz faster and cheaper than creating a whole new product that will take market share away from another of IO's products. Just my .02.
5) MIni-Zip for Digital Cameras. Much better idea, although I think several people on this board speculated about this when the "Zip-Across-America" shebang started and included Kodak as a sponsor. Not many other reasons for Kodak to be there, unless they just wanted to seen with a company that is still actually growing. IMO this is what we may see released at Comdex, and I like the implications of it. Someday not too far off there won't be film any longer, and getting in the ground floor of this huge market is a terrific idea. Thanks to Pkeeler for tracking down the info on flashcard-ram. The price point advantage of a mini-zip falls into IO's objective of giving consumers what they want at a price they can afford.
Sorry for the length, just thought I'd throw some thoughts out for discussion that have nothing to do with C-Guy, Ben, pennant formations, double bottoms, Chi-Chi or his famous alter-ego.
Wileedog 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: why no internal zip Date: 96-11-05 22:13:01 EST From: AJBoese
One reason Gateway may be offering an external zip, but no internal one, could be related to something I believe an analyst brought up during the conference call: namely that people seem to prefer having external zips. The mobility factor is half the genius of the zip drive. Why sacrifice that just for a little more speed?
In other words, Gateway wants to have the zip in its systems for christmas, but it's simply going with the one consumers seem to want most--the external version--and opting not to deal with the bother of the internal version for now.
Just a thought,
Alex 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:why no internal zip Date: 96-11-05 22:25:23 EST From: MF Ben
<<<One reason Gateway may be offering an external zip, but no internal one, could be related to something I believe an analyst brought up during the conference call: namely that people seem to prefer having external zips. The mobility factor is half the genius of the zip drive. Why sacrifice that just for a little more speed>>>
AJBoese,
Excellent thought. The issue certainly is a riddle with me. It may also be poor forecasting and the IDE internal version is still not available in quantity (a la the IBM problem). If so, that would mimic Apple's lifelong problems.
It could be many things: Gateway engineering problems/lack of desire to commit production capacity (labor)/IOM supply problems/other weirdness. Glad to see another theory on the board though.
I always thought the Fool was at its best when Fools spent brain cells trying to solve the riddles that can be so important to understanding a company. The original demand/production analysis springs to mind. :-)
Cheers,
Benjamin 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:News Date: 96-11-05 23:10:44 EST From: MF DrJimbo
Ben-
I absolutely agree that flash cards are a more robust solution for digital cameras than a disk medium like Zip. But as I posted originally, I think the price of RAM is holding up the low end on digital video. The cameras on a chip are getting very cheap, but there is no cheap storage medium. At the consumer level, a camera is going to have to be in that magic $199 ballpark again.
Its unreasonable to rely on multiple flash memory cards that cost at least that much and have to be separately transferred to the computer. You can't easily put the PC Card into your PC, you need an interface with the camera. At the consumer level, I see an opportunity for moving the Zip format to digital cameras.
When 44MB Syquest carts were over a hundred dollars, most of us owned just as many as we needed. Now with Zip and Jaz, I own more carts than I need, just in case. If the price of the digital medium for cameras came down, the same thing would happen. You could carry 4 or 5 disks with you instead of one PC Card. You also could get away with less compression. A cheaper magnetic medium would alter the ways in which the product is marketed and used.
On the DVT side, we're all speculating about what this product actually would be. What I was suggesting was a digital consumer medium for video. I presume that with a Fire Wire type connection, a Travan type drive could keep up with the digital data stream off a DVD. Similarly, the digital out of a camcorder could go to a digital video deck the same way. When I hear about digital video solutions they always revolve around PCs. A digital video deck could be stand alone or be a PC peripheral. But I don't think you need the speed of a RAID array for those kind of applications. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:After Hours Date: 96-11-06 00:22:47 EST From: MF Jeanie
<< Not really amazing when you consider the competition that is going to be shown at Comdex. There are a lot of people who are betting against iomega and know how this stock reacts when new competition is announced.>>
Excellent point for us to remember, Arentz... Iomega will not be the only exhibitor at Comdex.
Does anyone remember how the stock reacted when the LS-120 got a lot of press back in June. . . after it had been previously announced in April. To most of us it was old news about an inferior product that was still MIA. Wall Street sure didn't think so.
What else besides Swan can we expect out of Comdex? Swan alone will be a new name to the media and to Wall Street. How will they react? How long will it take them to investigate and decide if this is the product that will be the nail in Zip's coffin?
Let's be prepared for knee-jerk reactions in both directions.
Jeanie 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: More Camera stuff Date: 96-11-06 01:45:37 EST From: MF ETurkey
DrJimbo <<<The cameras on a chip are getting very cheap, but there is no cheap storage medium. At the consumer level, a camera is going to have to be in that magic $199 ballpark again. >>>
Not only is there no cheap storage medium for digital cameras, there is no standard, something the camera industry has had for awhile. 126 and 110 carts fitted many different brands of cameras, as does, of course, the ever present 35 mm film. The market hates confusion, not just in computers, but in everything else.
When my brother and I scouted out the available digital cameras at PC Expo in June, we noted that each seemed vastly different from the next, and that there was no easy and uniform means of downloading and storing the pics. Since easy, cheap storage for the mass market is iomega's business, it seemed ripe for the creation of a product. We asked every camera maker about the possibility of using Zip. They were all intrigued but noted problems of size, power supply and transfer of data. Then Edwards said, in the presence of dozens of Fools at a news conference, that he had his eye on the market (I don't remember the exact words, but that was the gist of it).
Kodak's cheapest version of a digital camera is now at the $299 level, something that seems to just start to grab the attention of the hobbyists and early adapters. You see the cameras now in computer stores everywhere, so I assume there is potential.
With the Kodak announcement of partnership with iomega in the Zip across America, it again pointed out that iomega was in a field with potential. I made the assumption that iomega was working on a product in R&D and that it would get out some type of camera related item, be it mini-zip or some other (me being ignorant of all things technical, I just sort of fudge on the details and let the Benjamin's and Arentz's think about that).
This brings us to the concept of how big the market is. Certainly for this year, the market would be virtually non-existent. Success of any such product depends on:
1. Camera prices coming within the $200 range for the mass market;
2. The mass market deciding they like the idea enough to buy;
3. The camera being competitive with those slip-in-the-pocket point and shoots;
4. iomega getting others to sign on with them;
5. Everybody else rolling over and playing dead.
In other words, while I think iomega will ultimately come out with a product, and a product that has potential (which is why I have been following the darn thing), it be highly presumptive at such an early stage to assume that such a product will be a raging success.
If everything went well, I don't think we would have any real indications of what types of profits there could be until at least Christmas, 1997. We might then get a clue as to the size of the potential market, if someone could bring a product to market by PC Expo in June.
Since all of this is conjecture, I have no clue as to what time frame to look at.
Wishing I had a nickel, not for every short squeeze predicted, but for every rumor spouted,
Eric
End Report. Posts covered through 3 a.m. 11/6/96. _______________________________
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