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Monday, December 08,1997 Friday, Iomega closed at $31 3/16, up $3/8 (+1.22%). THIS WEEKEND'S RECAP: A fairly active message board over the weekend resulted in a series of posts on SyQuest and its new SparQ drive, Zip sales, Zip as a potential standard and RecordIt. Unfortunately, too many posts were devoted to issues of personal debate -- hence this fairly brief report. 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++ MarkRogo comments on comparing SyQuest and Iomega
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 12/4/97. 1+++++++++++++++++++++++++++
Subject: Re: Syqt Production << Indeed, Iomega's own (recent) history serves as concrete evidence that it would be foolish to disregard the possibility of SyQuest restoring itself, and thereby, once again becoming a strong competitor.>> Of course, SyQuest has sold a total of less than 3 million drives in its entire history when the Zip came on the scene. Since then Iomega has sold well over a million Jaz drives (in about 2 years) and nearly 11 million Zip drives. For Iomega to dump SyQuest from its throne was a task made easier by: a) the relatively tiny installed base, especially of any particular drive, none of which had the base of the ancient 44MB b) the ability to create then-breakthrough pricing of $199 for a removable Today, SyQuest can only create "breakthrough" pricing by offering more MB for the old 199 dollars. In the meantime, Iomega is moving to a $99 Zip and is making it something of a must-have peripheral. The same opportunity does not now exist as it did then. Also, Iomega was in nowhere near as bad shape as SyQuest is and has been. Also, Iomega released Zip and its disks at very high gross margin percentages. In no one's wildest imagination can SyQuest be making much margin on SparQ at $199 and its media at $33. Iomega is not making such huge margins on the $299-399 Jaz and the $79-99 media that SyQuest -- which is nowhere near as far down the learning curve with SparQ -- can be making much moola. There is next to nothing comparable about the situations. Even if SparQ is successful, SyQuest will be unlikely to get the kind of capital it needs to really build production -- they are already burning through much of the cash from their manifold bailouts this year. 2+++++++++++++++++++++++++++
Subject: Re: Syqt Production (RB61) writes: << They must be making at the least, some measure of acceptable margin to take it towards profitability. >> I believe that it is naive to think that Sparq is going out the door without acceptable margins. On an unknown such as that, I will assume they are getting acceptable margins and will continue to sell the product. To disregaurd syquest even if you believe they will be short lived is short sighted for investment purposes. With a good product they become an excellant takeover prospect. Ed Harper is not Syed. His charge is turnaround, not save face or ego as Syed or whatever his name is. Harper's responsability is to his shareholders but many, if not most, of his creditors are shareholders now. Holding shares may be the only prospect of recovery of back debt. They seem to be holding tight so far. I believe that removable storage has put a serious bite into the rest of the storage sector. They are the ones that worry me. It is the injured party that fights the hardest. With these two factors in mind, I believe Harper is trying to create a viable buyout product, not beat Iomega. The storage sector is reeling from poor earnings and seeing Iomega's revenue, margins and earnings grow. They need a viable removable storage product/facility/experience. SparQ doesn't light my fire, but it might be better than anything they have available today. The impact on Iomega will be negligable over the next few quarters. But, it is my belief that it is foolhardy to disreguard ANY competition. I also believe that looking at the competition, one product at a time, leads to deceptive results. If there are 100 competitors with inferior products, but all selling some, market share for IOM is likely to decrease. This is a risk. Each sale of a competitor's "storage solution" is a nibble into IOM sales, one less consumer dollar in revenue, one part of a cent less in earnings. The installed base of Iomega with Zip and Jaz counterbalances the competition as it stands today. With Jaz, this could change more quickly since the installed base is less. I believe that the price of Jaz makes it more price sensative to competiton vis a vis the installed base. From an investment standpoint, my risk has not yet changed enough to matter to me today. But is the risk greater than last year? As a group. shark, LS120, Sparq, etc. are growing in presence. That, I will watch. Right now the status of the competition is more akin to INTC v. AMD et al than Coke v. Pepsi. I am comfortable with that and would be surprized if that were not the case. The past quarters, with virtually no competitors selling product (The shark seemed to be the only fish nibbling) was a luxury that is not usually enjoyed. 3+++++++++++++++++++++++++++
Subject: Zip #1 in Japan Finally Finally, Zip drive took over MO drive to place it as the best selling removable drive in Japan, at least according to Computer Shopper Japan. Here are some of the translation from 1/98 issue.>> Ranking (Last Month) Model Maker Street Price #1 (2) ZDR100 SCDS C (Ext SCSI Zip for PC98/DOSV) FujiFilm 16,700 - 18,800 yen #2 (7) MO332S04AB (640MB MO?) Olympus 41,700 - 64,800 #2 (5) MOS-S230 (230MB MO) Melco 19,800 - 39,800 #4 (1) LF-1500JDN (PD) Panasonic 17,799 - 19,800 #4 (3) LMO-230H (230MB MO) Logitec 47,800 - 59,800 #4 (3) ZDR100 PRDS C Ext PP Zip) FujiFilm 17,799 - 29,800<< >> FujiFilm Zip took over the #1 spot. Considering parallel port model and Mac model are also in the top 10, the product line is running away from the rest of the removable drive field. It has as fast transfer rate as HDD at 1.4 MB/second and is very convienient to carry around at 480 gram. Some say "I rather add a HDD at 20,000 yen.", but this portability is very attractive. It is very suitable for bringing data from work to home. This convenience makes it natual to take over the first spot by beating a bunch of MO disk drives. >> The ranking is based on a survey at 16 stores. Sales ranking at each store was converted into points, and points were summed up. $1 = approx. 130 yen. 4+++++++++++++++++++++++++++
Subject: Recordit results Here are my results using Recordit. My main concerns about Recordit were on Recording speeds, hard drive space, and music quality. Only recording speed and hard drive space will be addressed here. The following info includes the test computer specs, test conditions, Recordit estimates, test results, and a conclusion (with request for info). Computer Spec: Micron XRU Processor: 266MHz PII Chip set: Intel 82449FX PCI Memory: 96 Meg, 70nsec Access CD ROM: 16X variable speed ATAPI EIDE, Hitachi CDR-8130 Bios: AMI PnP Hard Drive (HD): EIDE 3.2 GB PCI 32 Bit Mode 4 Contrler, 1GB partition all available Removable: Jaz 1GB Drive with an Advansys SCSI-2 Controller, 157 MB available Test Conditions: Test Runs: 4 cases (Based on w/ and w/o S/W running, and use of Jaz and internal hard drive to record) S/W Running: Recordit w/ and w/o Word 97, Access 2.0, Excel 97, Publisher 97, Power Point 4.0, and Calculator. Typing this file in Word 97 at time of 2 tests. No files loaded in other applications. Background S/W running in both cases included Virus Scan, Volume Ctrl, System Agent, and In Ctrl Display Tools. No. of CD tracks: 7 songs, 6 songs 5 min. and longer. (5': 12", 5:28, 3:41, 5:27, 5:58, 7:51, & 6:20) Total audio time: just shy of 40min. (39': 57") Quality Level: Recorded using 3 Stars (***), Couldn't tell the difference from 4* Recording Space: Kept at the same levels (1GB and 157 MB) for each test. Recording Type: Always digital recording, No audio will be played. If you have a scratched CD, it may cause 2X audio recording. Recordit's Estimates: Quality level Memory Est. Estimated Record Time **** 73.54 MB 17.27 min.(17':16") *** 55.16 17.67 for Jaz, 16.87 for HD ** 32.17 40.13 * 6.89 40.13 Test Results: *** w/ software, on Jaz 55.2MB 20.67 min. (51.67% of audio time) *** w/o software,on Jaz 55.2 MB 17.16 min. (42.92% of audio time) *** w/ software, on HD 55.3MB 21.58 min. (53.96% of audio time) *** w/o software,on HD 55.3MB 17.18min. (42.95% of audio time) Conclusion: The data indicates that a person can record 2 or 2.5 same length CDs in the time it takes to listen to 1. Although these test results were obtained on a fast PC, slower results will probably occur on a Pentium I. The data shows the record time decreasing with more RAM available (32 MB and 64 MB would be better). A separate test of a typical scenario included using the Jaz to record 34-min. of tracks while logged onto AOL. The record time was about 13 min. (38% of audio time). The Jaz had no problem keeping up with the recording. The CD player light was ON for the quickest recording and blinking during the slower recording results. I did not determine the difference in record time when using faster CD player or my internal Zip. I will leave this to another person's report. My guess is a 20X or 24X CDROM will make an improvement. The ability to play close to 20 Xmas CDs on the Jaz is a surprise. Looking into purchasing an ELCOM EZ Audio extender to send the music to the stereo in another room without running wiring. Does anyone own one of these and is the audio decent? Recordit's track selection capability to playback songs needs improvement. I was very pleased with Recordit and looking forward to purchasing the deluxe version when available. 5+++++++++++++++++++++++++++
Subject: "Zip is the standard." Rarely do I have really interesting or new information to contribute, so happy to provide this. My wife is a CPA. Like most professionals, she constantly attends required continuing education courses. Some are even worthwhile. Friday was one of her favorites: the computer guru who explains computer systems/hardware/software etc. This gentlemen speaks to thousands upon thousands of professionals not only in the US but internationally. He is very respected and in demand. During his presentation he told the 125 or so CPAs present regarding the Zip drive: "It's replacing the 3.5 floppy...it's the standard." My wife asked him about other options during the break. Had kind words for things like the Syjet--they are nice and do the job but they're not catching on . When she asked him about Zip he just said...you guessed it..."If you need this kind of product, buy Zip. It's the standard." Somewhere back there, I truly believe we crossed the chasm. Maybe it was Zip sale # 10,146,892. Who knows. But nobody, not even the Iomega Posting Department, is paying this gentlemen to say what he said. He just tells what he knows is true. Remember, this isn't one small businessman who's discovered a fun or useful tool. It's a fellow who day after day and week after week tells people who depend on his advance that..."Zip is the standard." Sounds nice. _______________________________ End Report. Posts covered through 9:00pm ET 12/7/97. _______________________________
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