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Tuesday, November 25, 1997 Monday, Iomega closed at $30 1/2, Down $1 5/16 (-4.13%). TODAY'S RECAP: A significant news item was announced today -- Iomega was awarded a temporary injunction against Nomai. Some posters spent time discussing the issue while other focused on Comdex, Zip sales growth, overall Iomega sales and revenue, and one of Iomega's newest products, RecordIt. Enjoy! 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, asnything, in the IOM Today window and try again.
1++ Mstrping shares observations on the Nomai "Zip" disk.
Recap written by TMF Weekly; posts
compiled by TMF Weekly. 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 9:01pm ET 11/23/97. 1+++++++++++++++++++++++++++
Subject: Nomai Design Flaws http://www.geocities.com/~decypher/docs/nomai.html Tentative observations based upon visual analysis of Nomai disk photographs. My opinions only. 1. Metal Shutter Mechanism. Notice that the inner edge (side closest to the center of the disk) does not have a single plane surface as does the genuine Iomega disk. The bi-level edge on the Nomai disk offers less structural stability as the shutter opens and closes and is more prone to coming out of alignment resulting in improperly opening and closing and increased risk of hanging the cartridge in the drive unit. The Nomai version offers approximately 1/2 of the lateral support of the Iomega cartridge shutter in transverse operations mode and carries a substantial risk of not meeting the life-cycle specifications of the original design. 2. Spindle Attachment Plate. Based on the photo of the Nomai disk it appears that the spindle attach hole in the metal plate on the underside of the cartridge does not meet the precise specifications of the Iomega cartridge. Specifically the Iomega disk has a perfectly rounded opening which mates precisely with the drive spindle assuring properly centered, full surface contact mounting alignment required for proper operation at the 2900 rpm rotation speed. The poorly constructed opening on the Nomai Disk appears to be octogonally shaped as the result of a machine stamping operation. The impact of this roughly approximated variant of the appropriate shape is likely to result in excess spindle wear, non centered coupling and over time is quite likely to result in extreme wear on the motors bearings due to the lack of complete contact between the spindle and mounting surface 3. Notched Corner on Leading Edge of cartridge . In a blatant attempt to circumvent the design aspects of Iomega patents, Nomai has cosmetically altered the shape of the leading edge of the cartridge from the symmetrically designed angle pair found on the Iomega disk to a notched or cut corner on one edge of the cloned cartridge. The likely impact of the deviation from the patented design is two-fold. First the lack of symmetry in the clone does not allow for a sufficient degree of horizontal plane locking of the cartridge in the drive mechanism. As the disk spins at 2900 rpm the lack of horizontal locking of the cartridge may result in misalignment of the drive head with the magnetic media, in extreme cases this may result in catastrophic contract between the media and head, destroying the media and resulting in permanent damage to the drive head. Secondarily the notch cut alters the multi-dimensional symmetric weight balance of the cartridge in a way not anticipated by design specifications. The impact of the lack of multidimensional stability is likely to result in excessive wear on the drive motor, bearing s and spindle resulting in shorted drive life and increased risk of drive failure. 2+++++++++++++++++++++++++++
Subject: Re: Nomai disk Your employee "done good." Some thoughts on the Nomai disk. the cheap-looking reflector has been mentioned by others earlier. If it works, and evidence posted on the board in September-October indicates that it might, then Nomai has avoided 5,638,228 (the retroreflector patent). The notch at the upper left corner (front view) is obviously there to design around D370,009 (the Zip disk design). Finally the chorded circle segments (like a lemon wedge) at the bottom of the Nomai disk front and back may be an attempt to design around 5,537,281 (disk stabilization means). Personally, I think the last patent is the one that may give Nomai the most trouble with regard to reliability and compatibility. In its patent, Iomega teachs how to create a standing wave in a rotating floppy disk so that the heads can approach the media without damaging either the media or the heads. My guess is that Nomai is restricting the movement along the rotation axis (floppiness) in the region of the indentations. This must affect (in some fashion) the movement of the disk in the region of the heads as well. If the "floppiness" is poorly or mis-controlled it could lead to damage to media and/or heads. The "restriction" at the opposite end of the cartridge may also cause additional wear of the media. Just my thoughts... Is anyone qualified to disect a disk? 3+++++++++++++++++++++++++++
Subject: Re: Micron Electronics << "Unless, of course, the answer is yes. Why do they make Zip the standard a: drive? To distinguish themselves from the crowd. Do they hope this helps return them to profitability? I'm sure they do." Yeah, whatever. I am sure Micron sees Iomega's Zip drive, available on all machines from Dell and Gateway as the differentiator to get them back to profitability. Especially when it is on laptops that Micron is getting killed. Only in Iomega-land, >> Not sure I follow. To my knowledge Micron is the first manufacter to have Zip as the a: drive. Having the Zip as the a: drive certainly does serve to differentiate Micron from the others. This has been noted to be a significant event in the hoped for progression of Zip to status of "standard" by several contributors to this forum. Perhaps the difference of opinion here has to do with small words. Although your remarks "Yeah, whatever. I am sure Micron sees Iomega's Zip drive, available on all machines from Dell and Gateway as the differentiator to get them back to profitability." are presented sarcastically, change the highlighted word "the" to "a" and I think the sarcasm becomes misplaced. Micron made a decision to be the first, and currently only, major PC manfacturer to replace the standard floppy with the Zip as the a: drive. Why would they do this? Crazy as it may sound, I think that ultimately they did it because they believed it would add to the bottom line. Maybe that's just an Iomegaland fantasy, but the alternative notions that Micron did this because it would have a negative or neutral effect on profits, or did it without considering the effect it might have on profits, seem weird to me. And I don't think anybody has said that Micron views this as their central strategy to regaining profitability, but in the commodity PC business setting yourself apart from the pack, even in small ways, is important. After all, why should I buy a Micron instead of a Dell or Gateway? Sorry to drag out this thread, but my initial comments were in reaction to what I thought was a flip, and not really accurate, dismissal of Ira's questions. 4+++++++++++++++++++++++++++
Subject: Nomai Thoughts << Iomega Corp. (NYSE:IOM) announced that on Nov. 20,1997, the U.S. District Court for the Northern District of California granted Iomega a temporary restraining order against Nomai S.A. and its U.S. subsidiary, Nomus Inc. >> A very nice first round victory in the action that Nomai brought against IOM in the US. Unstated in the news release is the next step after obtaining the temporary restraining order...that of obtaining a permanent injunction. The order will only have long term meaning if the temporary is converted to the permanent. This is a great first step for reasons beyond NOmai...a small company with limited resources...because it sends a message to better funded disk makers that there is an outstanding chance that IOM will prevail if they attempt to make clones also. By the way, those failure rates are much higher than I would have guessed, especially for the Mac versions. I would have expected something under 10%. I am less surprised by the internals and laptops,later models, which no doubt have additional engineering in them to prevent such clones from working. 5+++++++++++++++++++++++++++
Subject: Re: Where is the BUZ? << The guy demoing Buz at comdex said "early '98, probably January". >> Yeah, that's what he told me, too. BTW, that's for the PC version... he said the Mac version should be available shortly after that, in February or March. The BUZ was simply amazing. The guy doing the demo in the Iomega booth was from MGI Software (the company that makes the software that captures, manipulates and edits the video). This software suite, bundled with the BUZ box and an ulta scsi capture card is an stunningly powerful and verstile multimedia system for less than $200. For the demo, he was capturing video from a VHS tape source, loading it onto a 2GB Jaz and editing it onscreen in a very hip looking interface. From what I could tell, effects are somewhat limited, but more than you'd expect for $200. Quality looked terrific. I was extremely impressed. All in all, the Iomega booth was the most impressive at Comdex, IMHO. :) The live show was great (we're all "Freaks" was the theme). Clik! was everywhere and working. The mock-ups of all the Clik! packaging was typical Iomega, bold and confident. My sense about the positioning of the drive in the marketplace is that it will be very important for IOM to get these little drives (and I mean LITTLE) into oem hands and into devices. I'm not sure that people generally will cotton to carrying around an additional storage device, no matter how small, unless it's built into the device they're using. Again, just my feeling. One interesting thing Mike McCammon (product manager on Clik!) was saying, was that he would like to explore the practicalities of designing in auto-sensing infra-red data transfer capabilities to the external unit. Maybe someone else who talked to him at the show could elaborate on that a little more? The gist, though, was that no matter what device you set it near, it would automatically sense the device and transfer the data by IRD. It sounded way hip to me... and he was talking as though it were a very real possibility. Trying to make using the drive a "no-brainer" is his goal. Someone at the Iomega booth said that Bill Gates came by early in the week and was checking it out. Gee, wonder what he thought. :) Iomega is a nice, freaky company. 6+++++++++++++++++++++++++++
Subject: Re: A nice aside... << The testing also showed that 25 percent of the randomly selected XHD cartridges tested were inoperable with internal Zip drives, which account for nearly 25 percent of the ten million Zip drives shipped to date >> In the category of For What Its Worth ;-) Iomega sold ~4.3 million Zip drives as of 1/1/97. The OEM sales for the 3Q96 and 4Q96 were 10% and not appreciable before that. 1995 Zip drive sales were ~0.8 million. Using those figures, I figure IOM sold about 200K OEM Zip drives as of 1/1/97. From 1/1/97 through 11/97, Iomega sold an additional 5.7 million Zip drives. As of 11/97, 20% (estimated) were OEM drives; or about 2.0 million OEM Zip drives sold total. For the period 1/1/97 through 11/97 Iomega sold 1.8 million OEM Zip drives and 3.9 million retail Zip drives. So, retail Zip drives look to be on pace for around 35-50% year over year growth in units (5.5 million vs. 3.5 million). OEM Zip drives look to be on pace for 1,400% growth (~3 million vs. 200K). Not sure what this proves beyond the fact that much of the unit growth in Zip drive sales is coming from OEMs. I'm sure we all knew that already. Retail Zip drive growth is also stronger than I would've thought for a 3 year old computer peripheral. I would expect much of the unit sales gains in 1998 to come from the OEM channel. This would mean greater SKU inclusion at Dell, Compaq, IBM, and NEC/Packard-Bell. Laptop Zip drive sales will also open a new sales channel that was not previously available. 7+++++++++++++++++++++++++++
Subject: Asia/Iomega << Asia will suffer for a long time. Winter allocation of energy demand will eat to M3. Also the export orders for 2nd 98 should be taking place from OECDs. I hear its very low compare to last year. IOM s Asia business? Like last years European fiasco. >> Joe, Just so we're clear... In Q1, 1996, before the "European fiasco" (about which I was a vocal critic of Iomega's performance), European sales accounted for 28% of total revenue. Asia accounted for 9.7% in the same quarter. By Q3, European sales, on a dollar basis had dropped by 18% and accounted for only 16.4% of revenue. Last quarter, Q3 1997, Asian sales accounted for 8.6% of total revenue and European sales accounted for 25% of total revenue. With European sales accounting for about three times as much revenue as Asian revenue and with Asian revenue accounting for less than 10% of Iomega's total revenue base, I sincerely doubt that even a drop, in absolute dollar terms, of 50% would mean much to Iomega. Essentially, if Asian sales decrease in absolute dollar terms, Iomega would lose $20 million in Q4 over Q3. As I'm expected a revenue number north of $600 million, Asian sales of only $20 would would represent 3% of total (a drop from the ~9% in Q3). We're not talking about a major effect here. In otherwords, for a company with Asian sales, yes, there is reason for concern, but Iomega generates over 90% of its revenue from non-Asian countries. (two thirds comes from the Americas, a significant amount). That is a short-term positive, given the current uncertainty in the region, but a long-term negative, given that Iomega should penetrate the market much better than it has. If I recall, Iomega once opined that revenue would be split equally among the three regions (Americas/Asia/Europe). Obviously, it has not. While that is another issue, the issue of Q4 or Q1 '98 reprocusssions to Iomega's top and bottom line due to Asian instability seems, at best, piddling. P.S. I'm hungry. Do you deliver? 8+++++++++++++++++++++++++++
Subject: Record It Views Record it Views: 11/24/97 The Zip Plus CD that was missing arrived next day UPS today. I installed the whole deal though the non-standard installation program seems like they took the Windows version and ported it over. The usual nice job of animation and sound. (Warning: Mac based experience) THE APPLICATION Record it itself is 3.5 megs, consisiting of an application and, doh, a neccessary extension. The installer informs you that an extra copy of the extension is placed in the Record it folder for easy sharing. In otherwords, I believe the license -- I haven't read it -- permits free distribution of the extension. THE SOURCE I "recorded" A Murder of One, by Counting Crows using Record It as well as "extracted" it using Toast extractor. Toast, for those who don't know, is a CD recording application and the adio extractor imports into AIFF files, essential for recording redbook audio standard CDs. The sizes of the two files are as follows: Record it: 10.5 megs AIFF: 57.5 megs The difference is obvious, an 80% savings using Record it. For those who are interested, the Record It file's creator and type is a MoviePlayer document (which can also import AIFF files from a CD, which I did, and due to MoviePlayer's slight overhead, that file came to 57.8 megs). SOUND QUALITY Obviously, the size savings is of little consequence if the quality sucks. While I could tell the difference between the AIFF file and the compressed Record It file, the difference wasn't astounding. Through the headphones, some loss of dynamic range was noticable as was some high-end frequency loss. Jim would probably be pickier but as the main use of the program, as marketed, seems to be microphone recordings and playback of "mixes" on laptops, etc., the main speaker sources will most likely be the PC's speaker or a set of poor headphones. You can't cut a CD from it anyway Considering the size difference, the sound quality is pretty good. One thing I do question is its use. The "recording" took three minutes. Toast's extraction in fast made (audio off, uses the full speed of my pokey 4X CD-ROM) took less than half, for those interested. I can't see folks actually recording a whole CD or lots and lots of mixes because of the ease of use of just grabbing 3 or 4 CDs and plugging them into the laptop or the PC. Maybe a mix or two or three before the novelty wares off. IMPACT The interface was somewhat clunky -- couldn't name CDs or tracks within the left window, for example, or the "record" window so no memory of CD tracks, like Apple's standard CD player has -- and the size of the files is still pretty large. While A Murder of One is a relatively long song -- over 5 minutes -- by today's standards, one probably cound't fit more than 10 seconds, plus Record it, on a Zip. You could fit more than that on a CD-R and have the added ability to play it back in over 100 million installed base of CD players. Bottom line, yeah, it saves space, has decent quality -- though Jim and probably others would squirm at that statement -- decent enough quality for its intended uses anyway, but it really doesn't excite me much. Will it sell Zips? I doubt it. Sincerely. The 14 year old boy crowd seems to own CD-Rs already -- as based on the sale of CDs full of pirated software all over the Web -- and it is far easier to grab a few CDs for the laptop and the road than sit and make a mix, especially to a non-permanent medium like Zip. My $0.02 Nice product, won't have an impact we could measure without an electron microsocope. I hope they didn't actually spend R&D money on it. _______________________________ End Report. Posts covered through 9:00pm ET 11/24/97. _______________________________
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