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Monday, April 27, 1998 Friday, Iomega closed at $8 5/8, Up $1/4 (+2.99%) THIS WEEKEND'S RECAP: Iomega's stock ended last week on a high note and Iomega posters on the AOL message board looked closely for positive news (or news that can be spun positively). Topics which did get air time include the new Sony drive, Zip costs, clik! and Zip compatiblity, and even Zip's potential relationship with a new USB standard. 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++ ZilberHere pines for a Zip/clik! drive
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 4/23/98. 1+++++++++++++++++++++++++++
Subject: Re: Floppy replacement << After hearing from a techie at the annual meeting that they are working ona frame for the credit card sized Clik! drive for the PC desktop and other laptops and PDAs why not have two replacements for he floppy: 1. A 40MB Clik! for small jobs, photos, etc. 2. A 100MB Zip for larger jobs. >> As you may recall ... During the last disk drive transition period, most Wintel boxes were OEM-equipped with two separate floppy drives, so that one could continue to work with older 5.25" disks while the 3.5" format gained acceptance. Unfortunately, this not only increased the cost of the boxes, it tied up valuable bay space which could have been put to better purposes. Just before the 5.25" format passed unceremoniously into the ash heap of history, Toshiba engineered and produced an internal dual-drive unit that contained the mechanisms for both floppy sizes, piggybacked tightly to fit within a single drive bay. I was so taken with this clever device that I bought two of them -- one of which is (fortunately) still in service to this day, as I haven't yet gotten around to salvaging my oldest archived bookkeeping and correspondence files that predate 3.5" disks. But I digress. Taking a page from that chapter of peripheral history, the Zip/Clik solution should be obvious! To boost Clik's acceptance and start bringing it into parity with Zip's ubiquity, we need a single unit containing both mechanisms! Be it internal or external, PP or SCSI or autodetect -- whatever -- I would gladly pay the inflated, despised $199 street price for a Zip/Clik Deluxe Drive. Unlike the negligible improvements over Zip Vanilla that can be had in a Zip Plus unit, the presence of a "future use" Clik slot in a hypothetical "Zip Deluxe" unit would represent genuine, unamiguous added value. A single solution to a dual-format problem. And if it could be offered at the same price point, Syquest Sparq begins to look like an outdated solution to last year's problem. With all the recent advances in miniaturizing the Zip mechanism for laptops, a single-unit piggyback drive mechanism seems not at all farfetched from an engineering standpoint. Damn! If only I'd posted THIS idea in the Iomega Turnaround contest! But I guess I've kinda missed the deadline. 2+++++++++++++++++++++++++++
Subject: How could Sony displace Zip? Lets have a realistic discussion about how the Sony drive could displace the Zip drive as the next floppy. How can Sony displace the Zip? My ideas follow. There is no particular reason for their order. 1. Be at a price where replacing the 1.4M and Zip is no decision for the OEM. ($25 or less) - Sony must have major design cost advantages over the Zip. I don't see this happening. The Zip design appears to be close to state of the art and has likely undergone a number of cost reduction design cycles. If there were much cheaper parts available, hard drive prices would be reflective. Sony also has to support two data types (200M and 1.4M), two head gaps, two rotational speeds, and a track positioning system to make the voice coil actuatormotor work on the 1.4M track format. All of this is extra electronics and mechanical stuff. - Sony can dump their drive at below cost to drive Iomega under. I'm not sure even Sony could afford this. If they license the drive maybe a couple of manufacturers could afford it. Licenses would not be shipping the product right away so this would take time. Iomega would also call foul to the US government and make the process very messy. 2. Have customers demand the product. Use aftermarket pull much like Zip success story. - Aftermarket success could be achieved by a low disk price or drive price or both. Just having 200M at a similar price won't create enough pull. Aftermarket certainly does not need 1.4M compatibility. We know Iomega disk margins are very good so they could probably undercut Iomega to generate huge excitement for the product. $5 a disk would probably do it. Of course in the aftermarket, they would also have to match or beat Iomega at marketing, brandawareness, ease of use, ease of installation, attachment methods (SCSI, notebook, PP, and ATAPI), software, and distribution. I don't see much profit for Sony if they price the disk low. Would they run a zero or slim margin for 12-24 months to knock Iomega off track? 3. Get the endorsement of Microsoft to ship all future releases on Sony disks. - CDs are so cheap to manufacture and very much the standard today. This has been discussed here at length. It seems very unlikely. 4. Have Iomega obsolete the existing installed base by releasing a Zip 200M (or whatever) drive. - Iomega's huge advantage in the marketplace is interchange of data between the existing 14 million or so Zip units. A Zip 200M would create confusion and interchange problems. Early adopter H. Photoman tries to deliver his prized work on a 200M disk to his new client. They only have Zip 100s. Either Photoman apologizes profusely about the schedule delay and puts the info on a 100M disk or the client buys a new Zip 200 drive. A zip is a zipeverywhere you go. Iomega discussions on the 200M have gone quiet after KE mentioned it years (?) ago. I don't think they will release a 200M as long as Zip 100 is still on the next standard path. 5. Have Iomega not meet the quality or delivery demands of the OEM marketplace. - I think Iomega realizes the potential of these problems. I wouldn't be surprised if KE was not doing enough on this front. Sierk is definitely hot on this. You can never be too good. The question is have they already soured some of the OEMs. We have no way of telling but they appear to be heading in the right direction from the comments at the stockholders meeting. 6. Fuji Photo decides to play unfair and withhold Zip media to give their project with Sony a little advantage. - Lets hope Iomega has them tied into a very solid, quickly enforceable contract. Lets also hope Iomega has another source in the works. Nomai is not using Fuji media but Iomega says the Nomai media is subpart. I don't know if this kind of tactic is below Fuji or not. 7. Japanese computer manufacturers take over the US marketplace and they chose Sony/Fuji for obvious reasons. - This is not very likely in the US. US manufacturers are as strong as ever. If it were to happen, NEC has the biggest presence in the US today and they are clearly in the Iomega camp with their Zip drive manufacturing license. 8. Nomai wins big and floods the market with acceptable quality imitation Zip disks. - Nomai seems to have won a few encounters but Iomega has not tested the patent portfolio yet. Who knows what will happen. If Nomai is successful, Iomega's disk profit business model either disappears or is very compromised when everyone joins in. Iomega would likely launch the 200M disk to try to regain the disk hold. I discussed the problem with the 200M above. I see this ending somewhere in between with Nomai licensing Zip disk rights for a price.None of the big boys jump in the near future and the disk profit business model will not be harmed greatly. Please comment on my ideas or put forth other ways Sony could displace the Zip that I have missed. In summary, I just don't see Sony as a threat right now. None of the scenarios above has much of a chance of occurring. 1.4M compatibility and 200M will just not blow away Zip's head start in the marketplace. On top of all this, I expect the Sony drive to be late just like most technical projects are. Spring will turn into fall at best. Zip is very reliable, and has set the bar high enough that Sony will take many iterations to come evenclose. Next year may be more likely. And how you make a highly polished head capable of flying over 200M media survive when relatively junk 1.4M media is inserted is beyond me. It's like expecting a low slung Ferrari to navigate a boulder field at 100 MPH. Then think that the 1.4M media will be old archived, bottom drawer stuff, not new fresh disks. Something bad has to happen. 3+++++++++++++++++++++++++++
Subject: Sony "backwards" compatability << For the 1.44MB operation demonstration, the Sony drive must be cross tested with another floppy drive on writing, erasing, rewriting and then reading of data on the same 1.44MB disk. >> The issue of backwards compatability with 1.44 mb is virtually moot. Sony is showing up too late to make 1.44MB a feature worth paying for. It ALREADY failed with the LS120 (rehashed as the the "super" disk). Why? Because 1.44MB disks are about as useful as Canadian pennys in Las Vegas. Fewer and fewer software packages come on 1.44 MB disks (not to say that Zips fill this role either, CD's do just fine) I assert that the existing world supply of 1.44mb disk drives (not installed, but in inventory) won't be exhausted before 1.44MB becomes an absurdly small and useless amount of storage. Making the Sony HIFD 1.44MB compatable is like making a Porsche with wagon wheels - utterly absurd. 4+++++++++++++++++++++++++++
Subject: Re: ZipPlus a minus? I Stated: << At this point, I would suggest that Iomega just buy them out if they are small enough and cheap enough. >> Nick Replied: << I am not sure I understood your last remark, because I did not read the thread. If you are talking about buying out competitors who are small enough and cheap enough I think there may be some serious antitrust action possible from other competitors. If you were talking about buying out all of the vanilla Zip drives and only producing the Xip Plus that is another thing. Please explain. >> Nick: By 'buying out competitors', I was referring to parts suppliers and third parties. Those unreliable (so far), and inadequate suppliers of Iomega that have held up production of one product or another. Perhaps this is too drastic a step, and replacement suppliers are the better solution. The film for the disks is made by Fuji, I believe, but drive parts come from some pretty small outfits that don't seem up to the task of getting to the next level, and higher The technology used in the Plus drive is better, easier to use, and more flexible than the standard drive. I would assume that if the ATAPI drive was identical inside to the external device, the economies of scale would be enormous in quantity. Many have expressed their desire to see Zip prices drop. The externals have, although slowly. The internal price point is excellent now. However, the OEM models have been sold at a much lower price for some time. I don't have the exact figure or scales, but I have determined the overall spread of price points to be in the $40 to $49 range. At a $40 level, I believe Iomega is breakeven, or slightly below. That information is from last October, so the case may be slightly different today. Kim Edwards was emphatic about getting OEM's to receive the lower-cost Zip drive. He did not want to ship anything without a decent margin. Judging from the current cash-flow, I can see why. 5+++++++++++++++++++++++++++
Subject: Firewire & Zip ... Firewire & Zip being mentioned in the same sentence .... Not that Zip drive will be using Firewire interface anytime soon, just that Firewire and Zip were being mentioned in the same sentence by Jack something, V.P. of Desktop division of Micron Electronics, in a telephone interview during a local radio computer talk show heard here earlier today in Southern California areas. They were talking about the latest 400 MHz CPU 100MHz Bus computers and all other exciting and new technologies. Then Firewire came up. Firewire is a new bus standard, that may come to the Desktop computer world in the next year or two, or longer, if it ever does. Future hard drives for Desktops may work with the new Firewire, IEEE 1492 (but I might have heard they used another IEEE number during the show) bus standard. It may add to or even replace either EIDE or SCSI (but I think if it is a replacement of either EIDE or SCSI, it will take a long time, both EIDE and SCSI will last a long time into the future).... well, who knows? We are talking about future technologies. Jack said what is so nice and exciting about Firewire, paraphrasing here, is that: we can dump what we got on the Video camera very quickly into our computer using the Firewire bus, work on it, and send out the result on a Zip disk. I suppose he was talking about a short video clip. But it was nice to hear Zip disk keep getting mentioned with new and future technologies --- and you wouldn't hear, at least I haven't heard, the old regular floppy, LS-120 or SparQ being mentioned that way. That shows the power of an almost 14 million drive installed base of a very much needed high capacity standard --- Zip. _______________________________
End Report. Posts covered through 9:00pm ET 4/26/98
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