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Wednesday, December 11, 1996 Iomega was down $3/4 Tuesday, closing at $22 1/2 (-3.23%). TODAY'S RECAP: Cisco Systems introduced its new Micro Webserver on Tuesday, "a turnkey network appliance that gives customers a simple and cost-effective way to share website information via the Internet and intranets"... which, of course, is a PR rep's way of saying, "Look -- it's a 'net box, okay?" This announcement came as no surprise to readers of I/T, as the news was reported here Monday. The device uses an installed Iomega Zip drive, "which provides 100MB of data and application storage," and will sell for a retail price of $995. Naturally, this new product was one of the main topics of discussion in our folder. America Online members can access the complete Cisco Systems press release at Keyword: Market News. 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 IOM Today window and try again.
1++MacBare notes a friend's observations of problems with Jaz
drives. As always, the following posts represent the thoughts of our contributors, not those of The Motley Fool. And now, the Best of the Board...Started 3 am ET 12/10/96. 1++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Jaz Reliability? Date: 96-12-10 09:16:02 EST From: MacBare
Some time back questions of Jaz reliability were debated for a while on this board. Of all the negatives posted here, this is the single argument which has concerned me most since I'm long in IOM. Here's some info and a question...
A close personal friend of mine works for a local university as a programmer. He is the most computer-able person I know by far--hardware or software. He recently purchased and tested ten Jaz drives and 15 carts for a huge project spread out across multiple locations in the U.S.
Here are the results for my friend:
Of 10 Jaz drives, one perfect -- built in January. One dead, wouldn't spin up -- built in April. Of the other 8, four were perfect, and four had mechanical problems--they would not eject the cart fully, requiring the operator to manipulate the cart out of the drive. All eight were built in August.
Of the 15 carts he purchased, 3 had bad sectors, up to 1/2 megabytes' worth.
Here's the question. Would one not hope that drives built in August, after more than six months' manufacturing experience, would be superior to this? Especially when the problem at hand was apparently a simple, mechanical one?
CayugaDan, what is your current experience on Jaz reliability? Thanks for any reply...
MacBare 2++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: IOM in Elle/Decor Magazine Date: 96-12-10 10:42:02 EST From: SKIJJK
Amazing as this may sound, Iomega is in the Holiday gift Guide in Elle/Decor recommending Zip, Ditto, and Jaz as gifts for Christmas. I now have my wife on the lookout for these ads. Pretty soon we'll see IOM in Road & Track as well as Playboy.
SKIJJK 3++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Cisco Delivers....1 Date: 96-12-10 10:54:56 EST From: JonTara
The Cisco MicroWebserver makes no sense. I wouldn't count on big sales to Cisco.
Why use this device, when you can get a PC with much greater capability for a bit more? And why a Zip drive on a device that almost certainly will be on a network? I don't get it... people are going to hang a computer on a network and then use Zips to feed it?
Cisco is a smart company, but this is just plain dumb. 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Cisco Delivers....1 Date: 96-12-10 11:04:32 EST From: Huibs pht
<< I don't get it... people are going to hang a computer on a network and then use Zips to feed it? >>
..one dilemma I've discovered since installing a (3Com:)) ethernet network in my office, is that I'm unable to copy files that are in use over the network..
..not use them, mind you, just COPY them..
..but I can copy any file to a Zip/floppy anytime, whether it's in use or not..
..huibs..
btw, I accidentally copied the incorrect definition for "somebodies", obviously I wanted: 'An unspecified or unknown person' 5++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Beaming Steaming Teaming Rea Date: 96-12-10 11:27:01 EST From: CayugaDan
<<<<<You can't replace a floppy with a device that takes $15 media. The CD, at <$1, is the preferred distribution media now, but magnetic media is still needed for certain types of distribution, and for transportability. But $15 is unacceptable as the minimum possible unit.>>>>>
Can too! {:->)
It can be replaced with a Zip and CD. Software distribution will be on CD (boosting sales of CD-R to small developers) until Zip cartridges come down to $8 or so.
You will have to download many drivers from the net. In fact, already companies are charging $10 or $20 for a 40 CENT FLOPPY, when you can download from the 'net for free. In fact, this would be easier for some companies, because they could have their ENTIRE driver set on a Zip, instead of one for this card, three floppies for that card, two for that card, etc.
Remember the 3.5" floppy beat out the 5.25" long before the disk price was close to the same price. And, if I recall correctly that price was about $8 or $10.
Now I'm not saying we will see the 3.5" die a quick death. Or even that the Zip will definitely be standard (though I believe it will). I'm just saying that it certainly is a solid, reasonable scenario that Zip will be standard. Then, at some point, Computer manufacturers will start cutting corners by not including the 3.5" drive that no one uses any more. It will become an option. And then the market will decide.
Dan Rapaport 6++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Jaz Reliability? Date: 96-12-10 11:32:16 EST From: CayugaDan
<<<<<CayugaDan, what is your current experience on Jaz reliability? Thanks for any reply...>>>>>>
My experience is that Jaz is as reliable as any good hard drive. Cartridges can not be tossed about, and should be kept in their casing when not in the drive.
My experience is that Zip is VERY reliable. Definitely rugged. More reliable than floppies or hard drives. In fact, one of the dirty secrets of the floppy drive is the reliability problems... especially of the disks themselves. What kind of quality can you expect for a few pennies?
Dan Rapaport Cayuga Computers (no, I have not sold thousands, so your experience may vary) 7++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Cisco Delivers....1 Date: 96-12-10 11:41:13 EST From: Quiltman
<<<<Subj: Re:Cisco Delivers....1 Date: 96-12-10 10:54:56 EST From: JonTara
The Cisco MicroWebserver makes no sense. I wouldn't count on big sales to Cisco.
Why use this device, when you can get a PC with much greater capability for a bit more? And why a Zip drive on a device that almost certainly will be on a network? I don't get it... people are going to hang a computer on a network and then use Zips to feed it?
Cisco is a smart company, but this is just plain dumb.>>>>
The press release gives the following intended purpose for the device:
<<<The Micro Webserver is an easy-to-use, standalone hardware product ideal for small businesses, branch offices and large enterprises that want to publish Web pages and share information via intranets. For Internet service providers (ISPs), it presents a plug-and-play Web server solution for customer premises.>>>
IMHO, for a lot of people, the PC is overkill in terms of what it is being used for in real life situations. Some people just use it for word processing and or other simple applications that don't require all the bells and whistles provided with the PC. What if you just wanted a machine for E-mail, Web surfing, simple word processing etc.? IMHO, there is a market for an "easy-to-use, standalone hardware product ideal for small businesses."
The ZIP provides the individual with flexibility and unlimited storage/backup at a reasonable cost. People want control over their data. IMHO these Web surfers and the ZIP are a great match. 8++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Beaming Steaming Teaming Re Date: 96-12-10 11:49:20 EST From: MF ETurkey
<<<Then, at some point, Computer manufacturers will start cutting corners by not including the 3.5" drive that no one uses any more>>>
You mean the way Cisco just did? As I understand it, and please correct me if I am wrong on this, this is a stand alone device - meaning it is not hooked up to a PC? And therefore has no immediate access for a 3.5 floppy .
Putting aside for the moment JonTara's concerns that there shouldn't even be a Zip in such a device, or that Cisco should not be in this market, it is interesting to see that not only was a Zip included, but that a 3.5 was apparently not.
Eric 9++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Cisco Delivers....1 Date: 96-12-10 11:55:16 EST From: CayugaDan
<<<<<<The ZIP provides the individual with flexibility and unlimited storage/backup at a reasonable cost. People want control over their data. IMHO these Web surfers and the ZIP are a great match.>>>>>>
Yeah, but this is a server, not a surfer. I have to admit that I as begin to consider the idea of Zip being the primary storage of a web server, I have some skepticism. My main concern is speed. Typically you want a fast hard drive.
On the other hand, there are specific server applications that don't require super fast drives. And 100MB is certainly enough for SOME applications. In fact, you may be surprised to know that my main server has a 500MB SCSI drive (and a Jaz for backup). That is running multiple server applications.
There may very well be market for this device, but I think Cisco is going to have to prove it by showing benchmarks of specific applications, by offering specific examples of where it makes sense to use one, and by showing where it would be cost effective . Oddly enough, people will have to be convinced that you can shave corners on a net server. 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: zip is us magazine Date: 96-12-10 13:27:06 EST From: Tintin2000
zip featured in computer gift guide in new us magazine.
I love the caption- When did computer storage get so sexy?? 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Branding Date: 96-12-10 15:30:48 EST From: MF ETurkey
Back at J&R today to buy a modem and disks, I asked one of the managers why the single Sony disks were 15 bucks while the iomega brand were 20 bucks.
He said folks were buying it for the brand name.
I said that Sony, whose disk they now stock, was not an unknown brand.
His response was that people wanted to buy the disks from the company that came out with the drive, the same as they wanted to buy Apple floppies back when the 3.5 was new, not "the other" brand, regardless of who it was.
So, despite the puzzling lack of advertising this season, it is more than apparent that the iomega name has a very strong foothold amongst those shopping this season.
By the way, J&R was sold out of Zip drives. Both SCSI and PP. They have a new shipment coming in to the warehouse today or tomorrow, but it was odd to me to see empty shelves so early in December.
I was told that they were flying out the door, so this may not be a supply problem. There was plenty of stock in Jaz, which was not flying out the door with the same success.
Eric 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Csco dumb / Jon Tara Date: 96-12-10 20:06:59 EST From: MF Equity
<<There is just no crying need for this product, and I think the cons far outweigh the pros.>>
Not for IOM. The more OEMs the better. Maybe CSCO is making a mistake, but I doubt it based on management's track record. I think it is yet another endorsement of the Zip's future.
Anybody care to speculate why IOM didn't bother to issue a press release re. the CSCO OEM deal? Hate to think the IOM PR department doesn't recognize the significance of the deal.
MIKE 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Sales and Supply 1 Date: 96-12-10 20:38:59 EST From: MF Ben
According to ICSC, this holiday season looks pretty good. As RobinBen1 pointed out though, holiday '95 was pretty weak so the comparison may be somewhat loaded.
I did check out ICSC's first week survey results and the computer hardware looks similar to last year's number (software was down). However, I'm not so sure their sample size is large enough to be statistically significant.
Getting back to the Zip supply thread. I'd love to see some other poster's estimates of Zip production capabilities this quarter. We can use the Iomega press release as a base, which I'm sure no one would have a problem with. I quote:
<<<One million Zip drives were shipped in February, 1996, almost eleven months after the drive was introduced, Maloy said. The second millionth unit shipped out in June of 1996 -- just a four month period, he said. Iomega's third millionth drive hit the street only three months after the second millionth, he added.>>>
I'd be comfortable using 1,000,000 Zips as the base number for Q4 production and working up from there. Actually, I submit another "base" number from which to work, one not as solidly based but defensible nonetheless.
The decrease of one month (four to three) in order to ship 1 million Zips implies a production increase. Linear is easiest to use and probably, when averaged across weeks, not too far from the actual equation.
Basically, and this is working roughly to merely get an idea of what may be going on, I figure that Zip production back in March was perhaps 220,000 a month and it increased to 290,000 in June, giving us a 250,000 average for the four month period and a monthly production increase of 10%. I get 320,000 for July and 390,000 for September, getting to 1 million Zips in that three month period.
Using the same growth rate of 10% a month -- used for simplicities sake -- I get around 1.4 million Zips this quarter, broken down below (numbers have been rounded to nearest ten for simplicities sake)
October 430,000 November 470,000 December 520,000
I'd be comfortable with a base of 1.4 million Zips giving that Iomega said the transition to Penang was going better than expected and that there should be no supplier problems -- hopefully. Even though I consider this a base, I don't consider it adequate production for a seasonal company that had a precious few weeks of finished goods inventory at the end of Q3. 15,000 Zips a day just isn't enough for the high season quarter.
Do I believe that production may be at some level either somewhat or significantly above this figure? Yes. Where? I don't know.
My question is: Where is MATSUSHITA??? Those internal drives should be hitting the OEMs at some point, relieving IOM of that production burden, allowing the OEMs to purchase internal drives more cheaply, and giving Iomega higher margins as they concentrate on the higher margin product line (external Zip/ disks) while Mats takes care of the lower margin, internal drives (though their margins will most likely be significantly higher than many of their other products, including the floppy drive, which gives them a huge incentive to push Zip).
Since this IS the big quarter of the year and excuses of "seasonality" won't cut it in January, does anyone have any analysis that they have done to figure out Zip production in Q4 that they are comfortable with having torn to shreds? <G>
PLEASE, DO tear away (stick to the analysis though, not name-calling). It only helps!
Cheers,
Benjamin
NEW YORK, (Dec. 10, 1996) -- For the first 10 days of the holiday shopping season, sales in the nation's regional malls remain on target for a projected increase of between 4% and 5% over the same period in 1995, the International Council of Shopping Centers (ICSC) reported today.
The council said sales in the malls surveyed in its study from Friday, Nov. 29 through Sunday, Dec. 8 are up 17.4%, compared with the first 10 days after Thanksgiving last year. However, the double-digit increase was expected early in the season because this year there are five fewer days between Thanksgiving and Christmas than there were in 1995. <SNIP>
The strongest categories so far this season are cards/gifts/books (up 23.9%) jewelry (up 20.3%) home furnishings (up 19.3%), and music/entertainment/software (up 16.5%), followed by apparel (up 15.3%), shoes (up 14.5%) and food (up 12.9%).
(FULL REPORT: http://www.icsc.org/holiday/news/weeklysales/96-12-10-02.html) 14++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Sales and Supply 2 Date: 96-12-10 23:21:05 EST From: PKeeler
MF Ben wrote: >>>My question is: Where is MATSUSHITA???<<<
My question too. This is the single biggest piece of news I'm is waiting for.
I think its safe to say that no significant royalties will be booked by Iomega in 4Q. There might be some revenue and earnings if Matsushita is purchasing large quantities of drive mechanisms from Iomega in anticipation of product launch, however.
FWIW, using the same type of calculations you used I also came up with 1.4 million Zips in the 4th quarter. Before Hypemenot has a fit, I would like to repeat your warning that there is no definite empirical basis for this guess.
Trying a different approach: During the secondary Iomega said it could produce a maximum of 5.5 million Zip drives in 1996. Assuming that capacity has not been added, that would give a monthly sales figure of 458,000 Zips or about 1.4 million Zips per quarter (Hypemenot: this is where Huibs gets his 15,000/day figure BTW). Looking at this data, we might be on the low side as Iomega also has two weeks of inventory to throw in. A quarter + 2 weeks would yield 1.6 million Zips. If I understood MF Robert correctly there is also 12 days of inventory in the channel. Therefore, 13 weeks (a quarter) + 2 weeks + 12 days = 1.7 million Zips.
However, I'd like to tie in the top part of the post. IMO Iomega has been constrained on IDE production because its been producing extra drive mechanisms for MCI. This added to the OEM fog (orders not given more than 2 weeks in advance) has probably given the IDE production lines fits. This would have the effect of taking drives made in 4Q96 and shipping them to retail/oems in 1Q97 or very late 4Q96.
I have seen recent Zips labeled as "Made in Malaysia","Made in Philippines", and "Assembled in US using US and Foreign parts". So, Penang must be making Zips with maybe facilities in Philippines still cranking them out under IOM control. And it still seems Philippines or Penang is shipping unfinished drives to Roy for assembly also.
PKeeler Patrick Keeler
P.S. Using your 1.4 million mark for drives what do you see as EPS and Revenues for Zip in 4Q96?
End Report. Posts covered through 3 am ET 12/11/96. _______________________________
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