|
|
|
|
Friday, December27, 1996 Iomega was down $1/8 Thursday, closing at $17 3/4 (-0.70%) TODAY'S RECAP: The Yuletide Lull continues on our Iomega board. Posting has been slight, news has been scant, and were it not for a thread on Iomega's marketing efforts (prompted by an expression of disappointment in IO's fall ad campaign by Tom Gardner in last night's Fool Portfolio report), we would have next to nothing to show you this morning. ~Kevinfurr~, fortunately, chimes in with an interesting look at Compaq's role as a member of the LS-120 consortium (post 4++, below). 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++PMiller751 comments on Iomega's push to create a standard in the light
of Andy Grove's book, "Only the Paranoid Survive."
Written by MF Cheeze, assisted by MF Jeanie. 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 12/26/96. 1++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Creating Standards I am in the process of reading Andy Grove's book, Only the Paranoid Survive and thinking about IOM. Andy makes many interesting comments on how market share is won and lost in the technology sector and one really stands out in my mind as it relates to IOM. Andy says in part that to gain market share (create standards) you must price your product as low as possible and then fight like hell to get costs down to make that price point profitable. The IOM team seems to be right on track with regard to this; they are pushing to get price point down with Zip on a chip. Andy further comments in the book that a head start is huge in technology and companies that get out early have a huge advantage. These thoughts may appear obvious, but it was nice to be able to compare IOM to what I was reading favorably. 2++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Creating Standards Andy says in part that to gain market share (create standards) you must price your product as low as possible and then fight like hell to get costs down to make that price point profitable. The IOM team seems to be right on track with regard to this; they are pushing to get price point down with Zip on a chip.>> Sure, of *course* they are doing all they can to get the price of the Zip drive down - that's the part they give away. But as long as they refuse to sell Zip media at a reasonable profit - and - more importantly, as long as they refuse to license it (Zip disks currently sold by 3M, etc. are actually manufactured by IoMega) it will never be a standard. A single-source "standard" is NOT tolerable. 3++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Creating Standards
<<From: JonTara I guess you are short INTC and MSFT to name 2 single-source standards. John, can you explain your logic? Mark 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Compaq connection -1 Date: 96-12-26 13:52:11 EST From: Kevinfurr
It's never been clear exactly what Compaq stands to gain from the LS-120, product. In my opinion it's no use counting on Compaq's involvement with the LS-120 to scare other OEMs away from using the LS-120. I doubt very much that Compaq gains anything if an LS-120 is sold at retail or to another OEM. On this point, there's been an awful lot of assumin' goin on. Compaq didn't invent floptical technology, we don't know of any LS-120 related patents that Compaq holds, they're not making the drives themselves, and I don't see any LS-120's being sold under the Compaq brand name at Computer City. I don't see a reason to think that somehow they'll be receiving any kind of royalties from the marketing of LS-120's. As we know, long before Compaq came to be called a "founding member of the LS-120 development group" (or whatever), the laser servo drive already had a long history. Before Compaq was ever involved, there was of course a predecessor on the market, the 21 mb floptical. It was even a bootable a:drive, with an add-on card. The key players then were Insite and Iomega, with their drives also being manufactured by MKE and Chinon, and 3M made disks. Then OR Computer Systems got involved by buying out Insite. As recently as 1994 these companies were talking of the upward migration to 100+ mb, and Compaq was not mentioned. So, all the technology was in place before Compaq came along. Iomega had a Floptical Research Center in Boulder, Colorado--don't you think they were working on higher capacity? Iomega closed down that center and discontinued the floptical. Today in Boulder there is a division of OR Technology called Optical Research, Inc., which does laser servo (floptical) research. (Like that's a coincidence?) Anyway, OR has the research technology, MKE is a big producer of both optical and magnetic drives, and 3M knows how to make the disks. So, what does Compaq bring to the table? Why are they always included in the press releases? Doesn't seem to me that Compaq would be needed in order to develop this drive. Maybe they were useful in compatibility testing, but I don't see them having done enough to be a principal in any licensing agreements, or to be receiving any royalties. Not knowing anything but applying some common sense, I propose the following advantages for each side in involving Compaq. None of which enriches Compaq when other OEMs buy LS-120s. Benefits for Compaq: -- Perhaps they received the exclusive right to offer the LS-120 option for a given period of time, giving them a modest (very modest so far) marketing advantage. In fact, there was a rumor last year that Compaq's benefit was that they'd be the exclusive OEM for 3 months. So far they've been the exclusive OEM for 9 months and counting. -- They help bring about a general enhancement to computers, which may encourage users to upgrade, buying new Compaqs. In the same sense, Intel is always forcing better technology (aside from microprocessors) on the industry, to make sure that the older Intel chips are the bottleneck to top performance, making users want to upgrade to the next generation of Intel microprocessors. -- Installing the LS-120 permits Compaq to charge about $220 more than otherwise, and that may provide enough profit to boost the margins on that computer by a few points. Maybe CPQ gets a good deal on the drives, for now at least, from MKE. Benefits to 3M/ OR Tech/ MKE to including Copmaq: -- Bringing in the biggest name in computers could help validate the notion of migrating to LS-120's, and so there's much name-dropping in the press releases. -- A small but guaranteed market in the nascent stage of manufacture, while the learning curve kicks in and capital is invested in the ramp-up. -- Compaq surely has some clout with the makers of BIOS chips, and Compaq may have been instrumental in getting Megatrends, Award, and Phoenix to code in support for the LS-120 as a bootable drive. Bottom line is, in my opinion Zip will need to prevail on it's own merits and appeal, we can't count on Compaq's involvement with LS-120 to save the day for Iomega. But by the same token, this would increase the potential of Compaq becoming a Zip customer. 5++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Creating Standards <<From: CyberVster
<<From: JonTara I guess you are short INTC and MSFT to name 2 single-source standards. John, can you explain your logic?>> INTC is not single-source. I have an CYRX chip in my computer. It is compatible. And, while I don't believe that INTC has licensed the Pentium, they have licensed the manufacture of other chips (486). MSFT users are free to select application software from thousands of companies. If you consider the OS to be the "drive" and the application software to be the "media", then you can see that Microsoft practically gives away the drive (like IOM), sells the media themselves, AND allows thousands of other companies to sell media as well. This is a win-win situation. As long as IOM insists on keeping almost all slices of the pie, their product will never be a standard. 6++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Adequate marketing? I noticed in the Fool portfolio report that the author didn't think that IOM's marketing has been adequate this quarter. I haven't seen much IOM marketing in magazines this quarter, but I have noticed that they have kept a high profile in stores, and they always are prominently advertised in mail order catalogues. What's the opinion on this board about the marketing this quarter--did they do enough, and if not what more should they have done (more magazine spots, or even TV?)? I think one goal of IOM over the next few years should be to make Iomega a household word, much like Intel, Microsoft, Nike, etc, so perhaps they should have done some more marketing this quarter. Removable storage=Iomega needs to be universally accepted. Brendan 7++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Adequate marketing? I just don't see the point in high TV advertising this past quarter for a couple of reasons: 1. You are advertising to an unfocused group that for the most part wouldn't buy the drive in the next twelve months anyway. I think Iomega still has a large potential in selling to technologically oriented people or focus business groups (ie. publishing/music) before they need to attack the mainstream market. Sell to the people who are going to first adopt the new standard and then get them to sell it for you to the rest of the world. 2. As far as just getting general name recognition out: I am just guessing but it seems that advertising the 4th quarter would be the most expensive time of the year. You can get name recognition any time of the year. The question is .. Could sales have been significantly better this quarter with more TV advertising? If the channel checks on this board prove to be accurate, the answer is no. Jeff 8++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Adequate marketing? <<<The question is .. Could sales have been significantly better this quarter with more TV advertising? If the channel checks on this board prove to be accurate, the answer is no. Jeff>>> Maybe not, but brand name recognition (which presumably increases sales dramatically at a later stage in the product cycle) does not happen over night. The more repetitive the exposure, the more the brand name has a chance of taking root in the mind of the consumers. As MF Ben pointed out, his mother wants a computer with an "intel chip inside". I think this is an example of the efficacy of T.V. advertising. My question is, is iom ready for prime time spots? Would it behoove them to exploit the momentum they earned from being first to market. As someone pointed out in "iom Today" (12/26) their sales force have done a great job in marketing their product (zip) as being the next standard. It would have been nice to see them slam the point home with "Prime Time T.V. spots". Thoughts? Opinions? Flames? Adam 9++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Adequate marketing? I think that looking at traditional print/television advertising misses the point. There is much more to promotional budgeting than placing ads. Just look at the presence of IOM products in mail-order catalogs, displays in the computer stores, etc. Those are advertising expenses and are far more effective in many cases than general print media. For example, how much does one ad stand out in a 300+ page magazine? Now compare that to an Zip display greeting you as you come through the door of a computer store or open a mail-order catalog. Moreover, I have seen Zip mentioned on the Today show and heard of second-hand reports of mentions elsewhere. These mentions don't come out of nowhere (usually). Some marketing person is making a relentless attack on the media people who make these recommendations. I know... I've been there. In fact, about two years ago I was getting calls from an Iomega PR person on an almost weekly basis (tape backup in this case). These PR people don't come cheap, either (we've gone the other way and hired them to promote our magazines, too). 10++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Advertising
I remember listening to K.E. during the last conference call. When this quarter's
advertising plan was brought up, he mentioned something about a strong presence
AT STORES. He didn't say much (I thing he said nothing) about T.V.
ads. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subj: Re:Advertising It is my personal opinion that IOM spent their advertising dollars very wisely. Several weeks ago, with the JPM lowering of the estimate, we got word of slow christmas computer sales...this based on earnings reports from retail outlets, i.e. Circuit City etc. Get Hip! The reason the retail outlets sales have been down is because of the inroads the mail order computer sellers have made into the retail outlets business. People are buying via the mail and that's where IOM's presence has been. Why spend precious capital on advertising to the masses (TV) when most of those folks don't even know how to use a computer? IOM is probably a year away from becoming a household word. I'm disappointed in Tom Gardners disappoint at IOM's seemingly lack of presence in advertising this quarter. Give em a break! The earnings report will be excellent. PS. I think it's a very good positive indicator for IOM's stock price when this board gets so dang morose! Jeff Brouws
End Report. Posts covered through 3 am ET 12/2/96. _______________________________
WE
DELIVER - Get IOM
In Fooldom Today delivered
|
||||||||||
|
|||||||||||
