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Thursday, April
30, 1998
Wednesday, Iomega closed at $8 1/8, down $3/16 (-2.26%)
TODAY'S RECAP: Iomega continues to ride the roller-coaster that is the stock market this week, and posters on the message board have chosen to focus on other areas... competition for the most part. Some debated the merits of competition in general. Others focused on particular companies such as Sony and SyQuest. Still others looked towards Iomega's future -- the clik! drive -- and the type of folks interested in removeable storage.
Enjoy!
INDEX:
1++ Bozzzzz questions the potential impact of the Sony drive
2++ JeffTF1 praises the existence of competition for Iomega
3++ Bsutton2 remarks on a possible clik! caddy for the Zip drive
4++ TMF Keeler comments on cheap removeable storage buyers
Recap written and posts compiled by TMF
Weekly.
Edited and mailed by TMF Debit.
Kudos? Gripes? Questions? Let us know.
As always, the following posts represent the thoughts of our contributors,
not those of The Motley Fool.
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And now, the Best of the Board...Started 9:00pm ET 4/28/98.
1+++++++++++++++++++++++++++
Subject: Re: LS-120 vs ZIP vs HiFD (SOLID CASE)
Date: 4/28/98 10:33 PM Eastern Daylight Time
From: Bozzzzz
from rjdiv...
[I repeat, IOM better beat Sony to market with a 200mb drive.]
Its hard to believe Sony could make a dent this late in the game without more significant differentiation than 100MB vs 200MB.
Granted, if this can done for same or slight increase in price, it would seem attractive from a $/MB perspective. But if this is the only advantage would:
1) Other companies include this as an OEM option since SONY is a competitor in the PC arena?
2) Many people ignore the IOM brand that has clearly solidified itself in the business market and to some degree the consumer market?
It seems like they are too late for a "Me To" product.
I do like the Sony name and do have a Sony computer, camcorder, CD, and more. I just can't imagine them replacing IOM's Zip without more significant competitive advantages.
Are there other features and benfits with the Sony product??????????
2+++++++++++++++++++++++++++
Subject: SYQT is good for IOM
Date: 4/29/98 12:00 AM Eastern Daylight Time
From: JeffTF1
People have been discussing one issue here for at least three years that drives me crazy. I think that everyone needs to realize what kind of a market the removable storage sector is.
This industry is growing so fast that Iomega does not need to "put away" Syquest, as some have been suggesting. Imation is allowed to sell one drive for every 10 that Iomega sells. Sony can offer their mass storage drive to the OEM's...and they are allowed to bag a couple. Heck, even Shark sells a few units here and there.
If the sector can grow at outrageous proportions (30%+ per year), it's OK to only own 70% of it. By having more competetion, that increases people's awareness of the NEED for a mass storage drive. Once they are aware, they'll ask around. That is what we want. We want as many people as possible to WANT a removable drive...any removable drive.
Let Sparq and LS sell a couple hundred thousand drives. Let their customers try to swap information with others. Which drive do you think they will buy next time?
As much as I know about the poor quality of Syquest drives, if my customers were using them that is what I would buy. I would HAVE to. Luckily, I have only been asked for information on Zip, Jaz, or CD. The day a big customer wants something on Sparq is the day I......well.....after I try to talk them out it.....then....well....then I probably puke...but THEN I will go buy one.
Syquest, Imation, Sony, Shark, etc...are all GOOD for Iomega. Every article compares them to Zip or Jaz, even the competitors' boxes use the words Zip and Jaz. Let Syquest sell at a loss, let Imation push people around...as bad as things have been at Iomega, they are still selling a lot of product.
3+++++++++++++++++++++++++++
Subject: Re: Future Zips
Date: 4/29/98 10:46 AM Eastern Daylight Time
From: Bsutton2
[What is wrong with a 40MB Clik! drive in the desktop with $9.95 media? You don't need a Clik! caddy.]
Nick, I think the issue is that consumers and OEMs are unlikely to give Iomega that much space in the chassis. If the Zip technology ever becomes the standard removable media for desktop computers, any second device necessitated by clik!'s form factor would face similar hurdles to OEM adoption as the Zip: OEM's would mostly "wait and see" while consumers "discovered" a compelling case to alter their habits.
The 25MB Zip disks proposed here certainly sound anachronistic if you know that a 40MB technology is in the wings, but there's something to be said for milking those existing Zip transports for all they're worth. In addition to presenting a now-familiar form factor and reliablity experience, the 25MB format would start life with at least 13 or 14 million "vested" prospective buyers that the clik! is unlikely to have for at least... what, a year? Going forward, a 25MB Zip media would be welcome wherever Zip drives are sold or used, without further qualification.
I think that folks here who have proposed a caddy in lieu of a dedicated clik! drive in the chassis would agree with you that the clik! format is more compelling than a 25MB Zip disk, but that it would face significant hurdles to adoption and would potentially undermine Zip sales. They reason that a clik! caddy in a Zip drive (if this were even remotely feasible from a technical perspective) would require an engineering kludge, but makes more sensethan mounting another major campaign to win a second removable media slot in the chassis before the first one is secure. That said, as an aftermarket add-on SKU to keep the retail channel happy, would anyone expect unit sales of a clik! caddy to ever surpass those of digital cameras sold in computer stores? I think Iomega knows this and is developing the clik! market as a brand extension beyond the computer business where Zip, Jaz, and Dittocompete. If clik! succeeds, product-line integration opportunities across markets will be a cinch. My guess is that the initial external clik! SKUs are probably targetted at early adopters and to demonstrate the format's feasibility in a variety of form-factors, but won't represent a serious attempt by Iomega to push its clik! technology on the computer market.
The point about caddies may be moot, though: I'm looking at a clik! disk prototype as I type this and -- though I'm certainly not an engineer -- I have grave doubts that a caddy for the Zip drive could be made reliable. The two media are very different.
For most frustrated floppy users, a 25 megger Zip alternative would be the cat's pajamas.
4+++++++++++++++++++++++++++
Subject: Re: Syquest numbers arent good
Date: 4/29/98 2:06 PM Eastern Daylight Time
From: TMF Keeler
[I thought people bought SparQ Drives for the cheap Carts. But they didn't seem to be buying too many cheap Carts either in this case.
So Jaz may still have the lead from the view points of Revenues, Number of Drives sold and/or Disk Tie Ratio (depending on which one of the above cases).]
A point I tried to make in the past is made here by NovW and is proven in Syquest's latest disaster of a quarter. People who buy removable storage strictly on price are too cheap to buy many disks. Iomega is correct in leaving this "no-man's land" between Zip and Jaz to all these other desperate companies. Its not worth it to sell to these customers.
Jaz revenue was $110 MM and SparQ revenue was $28 MM in the first quarter. That was the score without much participation of Jaz 2GB. Some would like to see Jaz prices drop in line with Sparq, but for what? To have $138 MM in revenue instead of $110 MM in revenue? At what effect to gross and net margin? Not worth it.
SYQT has 1/10th the sales of IOM but somehow has a market cap only 1/4 of IOM. P.T. Barnum could still make a lot of money in 1998.
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End Report. Posts covered through 9:00pm ET ET 4/29/98
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