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Monday, December 01, 1997 Friday, Iomega closed at $33, up $5/8 (+1.93%). THIS WEEKEND'S RECAP: After a quiet post-Thanksgiving market day, Iomega posters proceeded to comment on Iomega's clik!, sales, laptop Zip drives in CompUSA, Sony's HiFUD drive, the portable sotrage market and more. An eclectic collection to say the least, but plenty of good opinion and analysis on a wide-range of subjects. 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, anything, in the IOM Today window and try again.
1++ Duuwhee comments on the production future of clik!
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 11/27/97. 1+++++++++++++++++++++++++++
Subject: Re: Clik! is it This info is availible on the Iomega website: << Yes, but didn't KE indicate that the external clik! would be out before the eom's to create "demand pull-through"? >> The answer is yes. It is a very important distinction though. HeyKerry knows more than I do about the OEM timetable... I got the impression we should be very happy to see SKU's with clik! internals by next Christmas. The confusion may lie in the statement, (also on the website) that the clik! product family will be available as soon as the second half of 98. Now.... not to split hairs, god knows how hard splits are, BUT the word "family" doesn't mean a whole lineup of products now. Families are often made one at a time. This should make for good news releases all through summer and fall of 98. So lets not set impossible goals for clik! Iomega is going to take the time to get it right; just like they did with the laptop. FWIW the guy in the Laptop Zip area said that Iomega had waited to release the Laptop Zips until they were; and I quote; 100% perfect. He said the drives were testing at 100% off the production line before Iomega would release them. I know that people are going to say: "A HA! line trouble, production problems, QC nightmares" "Iomega lied to us and said it was working on improvements" ure hoakum. These are legit "improvements". Look at the SparQ; I bet they wished they "improved" that drive before they shipped it to Mossberg for review. I'd rather wait for a product to test perfect (wringing my worried hands all the while) than see it shipped to the WSJ for review (ferchrisssakes) only to find it bites. Can you imagine what the stock price would be today if Iomega got that type of well deserved hosing in the WSJ. The split would threaten the single digits. 2+++++++++++++++++++++++++++
Subject: It's beginning to look a lot like.... ... a high tech Christmas! Retailers are pumping millions of dollars into technology this season. From USA Today, "major retailers will spend an average $8.7 million on technology this year, up 36% from 1996, [and up 65% since 1995] according to an Ernst & Young study. "It's the first time in a number of years that retailers have begun to spend a lot of money on technology." Even mall Santas are going high tech, as more of them will be using digital cameras to snap (clik?) shots of the little darlings they bounce on their knees. So... what does any of this have to do with Iomega? Well, as I sit here in the stern of a Grand Banks trawler, bobbing gently against the dock of South Seas Plantation in Captiva -- a marina so accomodating that they have modem plug-ins dockside -- I can't help think that this Christmas may be the one that really reveals the digital camera to the teeming masses. When mom takes junior to the mall and, instead of just being offered a single snapshot of her kid with Santa, she's offered a complete photo package with customized borders because of its rapid reproduction capabilities.... the awareness dawns and grows into a "must have" item -- if not this year, next year for sure. Maybe Iomega also sees Dec 97 as the point of mass consumer awareness of digital cameras, and Dec 98 as the avalanche of actual sales. Sales that clik! will be ready to piggy back on. Just random musings on a beautiful sunny morning in Captiva... sorry for the ToykoMex-type travel digression, but I thought you'd enjoy knowing that we are dwarfed in our boat slip between two incredible, sleek yachts - 100+footers on either side of our little rented tub. One has the design of a bull & bear painted on its side and is named "Stocks & Blondes" (no, that's not a typo) and the other yacht is named "Fourth Quarter". Ours is appropriately named "Patience" :-) Very Foolish. Maybe someday the "customer's yachts" will be as big as the brokers. 3+++++++++++++++++++++++++++
Subject: Re: 3rd market & more for Click Another note on clik! usage -- as cell phones (think 'personal communications devices') get smarter and do more, I see a further benefit to the Vendor of the phones in having high-capacity, cheap, removeable storage. Consider the following scenario: First, we've toyed with little credit-card-sized rolodex (phone-lists) - or Sharp or Casio PDAs. Once the data's in, you're married to that unit -- won't trade up 'cause the data re-entry is too painful. Second, you know people that are dying to get out of their cell-phone service contract to trade up to better, cheaper service. (Well, at least a couple, right? Just ask 'em!) For cell-phone service users, a painless way to move one's personal data - v-mail, e-mail, phonelists, calendars - from unit to unit is to just pop out the clik! and drop it in the new unit you got in the mail. Now the SAME vendor can provide compatible upgrades to your service with more competitive features, and no data re-entry. Presto - the vendor stays competitive with new features (at same, or even reduced price?) and keeps you as a customer. What every service provider wants -- you, married to their service This benefit would suggest aggressive adoption by many hand-held digital device vendors - heck, every one of them will have to ship with a clik! in the box! Instant volume reduces manf costs. Just think back to what Zip would have been with OEM volume on day one. It was the first two million of single-unit consumer sales that took so long. The last 5 million were effortless. clik! the real razor blade. 4+++++++++++++++++++++++++++
Subject: CNF Laptop Zip Just returned from CompUSA, Garden City LI. Saw a decent amount of Parallel Port's, about 10 Zip Plus and one lonely external SCSSI. No Ditto Max. Down the road Computer City had a nice display of Parallel, external SCSI's and Zip plus. Literally tucked away in a totally obstructed place at CompUSA, I found about 12 CNF Laptop Zips with the Zip built in Logo on the box. About half for Toshiba and half for the Compaq 5000 series. Different shade of box for each. Compaq color similar to PP Zip, Toshiba's, color of Zip Plus. Toshiba Box says for Tecra notebook models and selected Sattelite models. I don't recall anyone posting a retail sighting of these. I would be interested in hearing other channel checks as we officially kick off the holiday shopping season. 5+++++++++++++++++++++++++++
Subject: Re: CNF Laptop Zip Yes, Mike, I can second your finding. I had called CNF and on their advice, I called CompUSA commercial department Wednesday. I had gotten tired of back orders for a innerbay Zip for my Toshiba Tecra. I called CompUSA in Philly. They had SKU's for several versions, and had a dozen of the Tosh SKU in stock!!!! An inner-bay Zip for my my Tecra is on it's way to me now. I can't wait. The CNF inner-bay Zip for Tosh Tecra, SKU #171662, that I bought was $299.00, but very curious was that CompUSA *also* has a SKU(#(171683) listed for an *Iomega-brand* inner-bay Zip drive at $149.95 with none yet in stock and an unknown ETA date. 6+++++++++++++++++++++++++++
Subject: Re: $89.99 Zip << I guess what I meant to say is that regardless of MAP or not, on this particular product at this particular time of year, I don't think a retailer will create a demand for a product if they have any doubt about being able to get enough of it. They might but I would be surprised. This would be particularly so during the Christmas season. Now that doesn't mean they can't issue rain checks but tell me, do you think a rain check would look good under the Christmas tree? >> Jerry, For years toy manufacturers tried to boost January sales. They tried massive price cuts, new product introductions, everything. Recently, they have hit upon a borderline legal concept that seems to work and is actually relatively common. Essentially, they build (or get through luck) huge demand for a product, such as Tickle Me Elmo (by accident) or Nintendo 64 (introduced before the season but in limited quantities). Parents go to the stores to buy this product and don't find it. Like you said, an IOU doesn't work with a 10 year old and something has to go under the tree. They buy something else and the kid is happy. Sort of. Come January, the product sees good supply and the parent, reminded, no doubt, by the child of a promise unkept, purchases the product. The toy companies and retailers get the extra, and needed, January sale. This is an actual and documented practice. Make no mistake. << Let's not forget the huge backlog IOM had at the end of q3, most being retail. I am going to keep my eyes on these stores and see how supply holds up. If it does, then I'm on record for $600mm for Q4. >> With a good percentage of sales going to OEMs and mail-order (35% OEM and what catalog, I dunno), I don't know what store supply will tell us. I do think that heavily advertised and low-priced Zips do indicate what retailers believe will drive "walk-in traffic." However, due to their need to drive January sales, it doesn't neccesarily mean they believe they have or will have a huge supply. I'm not saying there isn't a decent supply, just that there needn't be a correlation between the marketing for a product (either co-op or direct) and the supply. As well, the holiday season is ripe with products that aren't in good supply -- see WebTV Plus -- but are used as walk-through traffic draws. 7+++++++++++++++++++++++++++
Subject: Re: Barron's Consider this excerpt from the Savitz piece: << Iomega, which still likes to claim the ZIP drive will replace the floppy drive, now faces the prospect that the floppy will, in fact, be replaced by a super-duper floppy with backwards compatibility. Just why you'll need a ZIP drive when that happens isn't clear.>> Note the phrase, "when that happens." Mr. Savitz is apparently ready to hand the title of Floppy Replacement to a product that won't be on the market for months. However, I wouldn't dismiss his opinion out of hand just because it is negative. Still, it comes from a writer and a publication that utterly missed the success of the Zip drive even after it was on the market. I would like to know how they explain that before I accept Savitz' judgement that the Sony HiFD will replace the floppy and kill the Zip. I would also like to know why the Sony product will succeed when other "Zip-killers" failed. Mr. Savitz doesn't mention that. It is as though the HiFd is the first competitive product the Zip ever faced (or, I should say, ever will face, since it is not a product, yet). Incidentally, Mr. Savitz' assessment may not have been shared by the bulk of attendees at Comdex, judging from how he describes the HiFD. He called it "not as well publicized" (compared to various CD and DVD products). Also, while Mr. Savitz describes his own interest in the product, he doesn't indicate that his interest is shared by others. Moreover, Mr. Savitz doesn't report anything regarding the HiFD and Zip that was not freely available to anyone attending Comdex. Considering what has happened to the price of IOM since Comdex, it would appear at least possible that few investors were as enamored of the prospects for the HiFD as Mr. Savitz. In the two weeks since the last trading session before Comdex, IOM has risen more than 14%. Maybe investors bought and sold it in ignorance of what Mr. Savitz reports or maybe they disagree with him. 8+++++++++++++++++++++++++++
Subject: Re: Barron's << Wasn't SONY (oh my God, now I'm really afraid) this great company the same company that developed the beta format for videotapes, better than VHS for sure, but if you want to rent a movie on beta forget it, and if you want to see a beta machine, go to your local museum. Enough said about the SONY ZIP killer. More than 10 million ZIPs out there, how many SONY superfloppykillers out there?, even less than the number of beta tapes out there! >> Just because a company lost one standard war (or even two) doesn't mean anything . Sony is also the company that set the video quality standard (D1) and is the same company that invented the Walkman and Trinitron. Do you own a Walkman? Ever have? How about a Trinitron TV or monitor? How many Sony products do you have in your house? OK, not beta, but so what? There are many arguements against the Sony/Fuji super floppy project, but beta isn't exactly one of them. If anything, Sony has learned a lesson, an expensive one, about licensing out (Matsushita licensed VHS like crazy and, actually, adopted an aggresive OEM policy). Ridiculing Sony for beta and saying that Sony isn't a threat because of a failure twenty years ago is like saying Iomega had no chance because of their failures in the 80 and early 90s. Not exactly true, was it? Let's stick with the basics and what counts. Obviously, the market doesn't care if Sony failed with Beta 20 years ago. Does it care that IBM failed with PCjr or Coke with New Coke or Microsoft with Windows 1.0? Past perfomance is not indicitive of future success (or failure). What are the relevant attributes? I can name six: 1) Allegiance, neutrality is best 2) Installed base, acts as a barrier to entry 3) Cost (boxmaker margins are thin and these guys are loathe to take themselves out of the price competition) 4) Capacity/ Speed (these are the performance attributes) 5) Backward compatability (a source of debate but a relevant attribute nonetheless) 6) Marketing ability (chicken/egg means you must drive retail sales as well as OEM) Now, Sony and its drive have a mix of these attributes. Iomega and Zip also contain a weighted average, so to speak, of these criteria. It would depend on how heavily you weight each attribute as well as how you score both Sony and Iomega and HiFD and Zip. Do that and you can give an informed opinion on what you think Sony's chances are. It does mean actually thinking about these attributes (or others) and considering the value of them. Frankly, I think Iomega has numbers one, two, and three while Sony has four, five, and six in its favor (as much as I admire Iomega's marketing, Sony has been doing it for years and years and is a retail giant). Which criteria do I weigh most heavily? Two and three, though excellent arguements can be made for four and six. Everything is a balance of course and while we have the historical record of consumer's preferences, they are tend to shift like the wind. I expect Iomega to have an installed base of 20 million Zips by 6/98. Frankly, I think this will pose the largest barrier to entry, but nothing is ever certain and Sony is definately NOT SyQuest or Imation. It has huge resources, close ties to other companies, and a willingness to succeed (not to mention a knowledgable partner in Fuji). I'm waiting for more information, especially specific pricing information on the drives -- though Iomega would scream "dumping" if Sony sells below cost at a loss to get inclusion, a move that would be intelligent imo. Bottom line, Beta is irrelevant. A red herring. Fry 'em, but fry 'em for the right reasons. 9+++++++++++++++++++++++++++
Subject: Micron In September of this year I purchased a Micron computer ( yes it has an internal Zip.. yes I've been very happy with my purchase ) and in todays mail I received the "premier edition" of Micron Additions magazine. The front cover, in bold print, has among other things "Free Iomega Zip Discs with purchase of Zip drive...... page 24". On page 24 there is nothing but Iomega products shown with a pictures of Jaz II, Ditto Max and Zip Plus. The "free" disks consist of a 3 pack when a Zip Plus is purchased.."while supplies last". 10++++++++++++++++++++++++++
Subject: Re: SuperDisk << Also, the first time CompUSA advertised $149 LS-120's with a $100 rebate (from USA Identity) they sold out the entire stock (at least 40 drives) within a few days. I noticed that the same thing has happened again this week (although I don't what quantity they had in stock this time around). >> Warren, I don't have a clue as to the sales of these products either. I do, however, think it is a shame that the high-capacity floppy replacement is getting so confusing for the consumer. I don't believe Iomega would have stood a chance if Sony or 3M came out with their units in 1994 or 1995, but they didn't. The average consumer is looking now at price alone for the most part. This would apply to retail customers, not box buyers. If it comes standard in a box, they will grab it, whatever the device is. Competition is a great thing, but not when competing standards are at stake. Sounds like the current DVD debate. I like the stated specs of the Sony unit, but have no overwhelming need to search for one. The floppy replacement just isn't that important a piece of equipment to me. The Zip is fairly fast, easy to use, and does what it is supposed to. If anyone wants more than that, which I believe is a minority segment of the PC population, then they get a larger (or second hard drive), or a huge removeable cartridge drive such as the JAZ or whatever. That's the type of device that I need, but most do not. Iomega's advantage is the OEM sales and support, presence in the Notebook market, and huge installed base. The installed base is not a guarantee of future standardization, but it does help out a lot. If the new drives from Imation and Sony are advertised to the hilt, they may put a slight crimp in the retail sales growth of the ZIP. But their eventual success will always be tied to their OEM support. Any floppy replacement that isn't adopted by the box makers in unison will never be the standard, in my opinion. The bottom line is that notebook makers have stated their intentions to put the ZIP drive in notebooks, and the list of box makers for PC's is well known. I believe that as the notebook Zip is shipped, then the PC's will follow suit soon after that and just include it as a standard device. Assuming that the notebook ZIP is in all the machines by the summer, they obviously have won. I also believe that the delay in the Notebook Zip caused many OEM's to offer the Zip in PC's as an option for the most part. That will change. I expect this battle to be over (hopefully) by next fall. 11++++++++++++++++++++++++++
Subject: Iomega hits main street big time I live in the small village of Reading, PA. The 139th market in America. I mean so small if you sneeze on the expressway you miss the only exit. The local rag, The Reading-Eagle Times has a sunday business section that usually consists of local company press releases word for word. Well, in today's edition there is a black and white photo which takes up almost 1/4 page. The headline on the photo says "Byte-Size Package". It is a picture of 24 clik! disks in a case (like a slide case). There is a hand with another clik! disk in it's palm in front of this case and copy under the picture that reads: Iomega Corp. is introducing clik!, a new high-capacity, highly portable family of removable storage drives and disks. They are designed to open new applications in digital photography and handheld computing. The new clik! disks hold 40 megabytes of information - capable of storing 40 high-quality digital photos. The disks, about the size of a matchbook, will cost $9.95. The company, based in Roy, Utah, said the products will be available next summer. If this thing is in the Reading, PA paper it must be in a lot of papers in market sizes 100 - 200. Have a great weekend. _______________________________ End Report. Posts covered through 9:00pm ET 11/30/97 _______________________________
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