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Wednesday, April 01, 1998 Tuesday, Iomega closed at $6 15/16, unchanged. TODAY'S RECAP: Well, it's official: Iomega filed for Chapter 11 bankruptcy after allegations of insider trading caused the stock price to plummet to less than $1 per share as the U.S. Justice Department announced criminal indictments of newly-departed CEO Kim Edwards and the majority of Board members. Oh, wait, it's April Fools! Never mind. Instead of dropping or rising, the Iomega stock price parked its keister and didn't budge... much, anyway. So, posters in the message board had to focus on other topics: Zip Plus as a PC Magazine Editors' Choice (as was SyQuest's SparQ drive), software for Zip disks, the status of the new IOM and the whole mess of backwards compatibility and market share. 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.
1++ Tyler43064 wonders about comparing the old AOL to the new IOM.
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 3/29/98. 1+++++++++++++++++++++++++++
Subject: Re: ZIP on a Chip and Joe Great post!!! Could the founder of Compaq that you refer to be Rod Canion? Story goes that he sketched the first compaq over a restaurant dinner on the back of a paper napkin. Greatnesss sometimes has inauspicious beginnings. One point I'm not sure I agree with is your contention that KE took IOM as far as he could. We'll never find out if his strategy was sound or if he was more a victim of circumstance. Granted some missteps were made, but what company in it's growth phase hasn't made similar mistakes. Read this months Fortune Magazine for some great insights into the importance of brand (marketing) especially as it concerns AOL. This is a must read for holders of IOM stock. There are some terriffic parrallels one could draw between the "old" AOL and the current IOM. Similarities include shareholder lawsuits, seemingly insurmountable compettition, a bashed corporate leadership, and stock price teetering on the ropes like a punch drunk prize fighter. Fortune points out that AOL's service is "clunky" and Microsoft for years never has been the best software and yet they are the premier products in their fields. How can this be? Never underestimate the the importance of branding. IOM is still pretty cool stuff in my opinion. It may take a while but keep the faith. With it's market share, it's brand recognition, and it's cool products IOM is so far ahead of the competition it's not even a race. The stock at it's current level is extremely attractive. Stay tuned and lets see what happens next. 2+++++++++++++++++++++++++++
Subject: Click death... From PC WEEK magazine, << HOPE FOR ZIP OWNERS. After reading about Click Death, reported here last month, software developer Steve Gibson uncovered good news. After tests and modifications, he says his new Version 5.0 of SpinRite can revive a dead Zip disk. This won't work for drives with defective heads, but SpinRite may well grant new life to dead Zip disks. >> 3+++++++++++++++++++++++++++
Subject: Zip Plus editor's choicein PC Magazine Is it surprising that Syquest did not mention that the same article that gave editor's choice to the flimsy (IMO) SparQ, an editor's choice was given to Zip Plus? In fact, the Zip Plus is mentioned and listed first. On page 156: "If you are buying a new PC, you certainly want to opt to have a Zip installed" 4+++++++++++++++++++++++++++
Subject: Re: Yesterday's technology? Sailing fairly close to the edge of a maelstrom, the otherwise even-keeled Zilber notes: << I'm thinking that maybe backward compatibility is not even that big a selling point for these drives. It's a bonus. It makes it easier to rationalize going to all the trouble of cracking open the computer case in order to install the thing. >> Correcto-mundo. Cracking open the computer case has always been the issue. Early-adaptor techie-types who lurked on Internet Kook boards were eager to do it when the internal Zips first ramped, but in quantities far below the current installed base of external drives. You can reason that having violated their machines once, these feckless do-it-yourselfers might be induced to strike again. But they don't exactly constitute a mass market. That's those other folks, the Great Unwashed with the $995 Packard-Bells. Are the forty or fifty million computer users who constitute a defacto standard ever likely to try that at home? Damn computers these days come with rounded bezels, bizarrely colored-ones with cute little plastic doors, and no dearth of scary warranty conditions. If you think the few thousand loonies who can't figure out how to install a PP Zip drive are a service nightmare, wait until you ask them to peel open their Packards! Clearly, the trick is -- as it ever was -- to get OEMs to crack open the case for them. BTW, with respect to backwards compatibility being perceived as a "bonus", in the razor-margined high-tech world some folks are asking Iomega to join, "bonuses" are routinely discounted out of the price. The moment you, as the marketer, say a feature has zero value, the entire supply chain expects you to deduct your cost to include that "bonus" from your current offer. Consequently, once you engineer it in there, you're forever bound to dedicate a portion of your marketing strategy to keeping it valuable. << Brand loyalty will carry Zip just so far. At some point, economics take over. If LS-120 is widely available for $129, no internal or external Zip should be retailing for more than $99. >> While I'd love it if the folks jumping on the lower-production cost bandwagon would agree with me that the brand is Iomega's strongest asset and that Marketing is the key to managing the brand, nobody should infer that this in any way excuses Iomega from its obligation to find workable price/performance propositions. (So I have no rebuttal to yesterday's "Zip on a Chip" homily, even though it might be interpreted as an anti-Marketing backlash. Four legs good, two legs better.) In the most literal sense, Economics has always been the Big Picture. But without much discussion here of overall PC market conditions -- a context that may have gone badly wrong for Iomega during the holiday selling season -- all our sophisticated carping about pricing strategies and competitive inroads since the earnings warning smack of too little, too late. With the Zip drive, Iomega long ago indicated a target aftermarket price of about $99 at full ramp, and folks here used to burn incense and sing hallelujah! every time an intermediate cut was announced as if we'd divined another waypoint on the path to Valhalla. (Some participants in the current discussion will remember when Kim Edwards gave us a magic formula that could predict sell-through as a direct exponential correlative of pricing and how this forum bought it, hook, line and sinker. As it was recounted to newbie Iomegans throughout the winter of 1995, each halving of the Zip's ASP would produce the practical effect of doubling consumer Demand. Perfect elasticity. Who couldn't love this company? Business Science was a most wonderful thing!) But those awful production problems kept the long-awaited dream of demand alchemy just beyond our reach. In its place, we settled on Million-Zip Milestone announcements to keep our Dead Reckoning plumb. Breathlessly, we watched the wires and primed our spreadsheets, waiting for clear portents of progress in Roy. Someone proposed that 20 Million Zips would indicate with certainty the moment of critical mass, and ten thousand posters immediately offered to predict the exact, propitiate moment of its achievement. (In one of Fooldom's braver exercises, a college kid named Ben Lipman rebutted every, single one of those predictions one long weeked before succumbing to the dread Iomegan Vision Thang and retiring, muttering to a cave near Wall Street.) Then, at about 12 Million Zips, the company took away this shred of hope and gave us, instead, the Zip Plus. Most of us are still trying to figure out if that $199 introductory price was intended as a temporary or permanent deviation from the original $99 strategy. In hindsight, it seems only to have confused consumers and confounded the bejeezus out of us stockholders. And to complicate matters, Kim Edwards' lips are permanently sealed. But in seeking to make sense of it all, does anyone else here find it a bit reckless that we don't see much discussion of overall PC market conditions this quarter? CPQ is reportedly dumping PC inventory, IBM is said to have 40 weeks' worth stuffing its channels, and Europe appears to have fallen off the compass for several industry participants. With all the hostile inferences that Iomega's two-month old ad campaign is the main detriment to profitability here, and all these calls for abrupt reversals-of-course in the wake of Edwards' departure, are we assuming that demand for Iomega's products exists in a vacuum? Regarding your suggestion that we need a $99-versus-$129 price advantage over the Lamentably Slow 120, I'd appreciate hearing your further thoughts on this. Someone might conclude that you're imputing about $30 as the value of the slower machine's extra capacity or its backwards compatibility. << Can anyone tell me why Imation's stock, which had taken quite a tumble since last summer, is now up 30% in the past two months, while Iomega struggles to limit its losses? >> Sorry, Zilber. Correlation still doesn't imply causality, even when it adds a nice coda to an otherwise provocative post. But I like your stuff, man. Keep thinking. _______________________________
End Report. Posts covered through 9:00pm ET 3/30/98.
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