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Monday, May 4, 1998 Special Note: IOM in Fooldom Today will be discontinued Friday, May 8, 1998. We'd like to encourage all our readers to join "Iomega in Fooldom Right Now" -- happening 24 hours a day, 7 days a week, in our Iomega message folders. If you dig Iomega, hate Iomega, or just want to see what everyone else has to say, that's the place to be -- please drop by! Thanks Fools. Friday, Iomega closed at $7 3/4, down $1/8 (-1.59%) THIS WEEKEND'S RECAP: The Iomega message board was quite busy over the weekend, but discussion had little to do with the stock price. Instead, many posters were fixated on a reported Zip failure rate of 1%. No one was clear on what this meant exactly, but there were plenty of suggested answers. Other posters looked at disk and drive sales, Iomega's college inclusion, a new Zip product, Iomega in print (Business Week and US News and World Report), and even Iomega in Germany. An eclectic collection to be sure. 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++ Waverunner shares a conversation with a broker (a nod to NCState?)
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 4/30/98. 1+++++++++++++++++++++++++++
Subject: My Broker Called So one of my brokers calls me this afternoon. Being a client that he knows is not too technologically impaired, he wanted my opinion on his planned PC purchase. So I asked what he was planning on buying. He rattled off Dell 266 Pentium II, 64MB Ram, 8.??GB hard drive, 56K, 8MB Video, HP Printer. Incredulously, I said, "Is that IT?" He said yes. I said "You have got to be FREAKING KIDDING ME! After all this time, you go and order a PC WITHOUT A ZIP DRIVE?" "well, do you think I need one?" I explained the many uses and the importance of backup and file transfer, etc. etc, add nausium, and then asked if he ordered online or with a rep. He ordered by phone, so I told him to get a Zip, and that while he was at it, to do a bit of Zip research with his rep. First of all, when he called initially the rep never made any mention of Zip. After he called and ordered Zip he called me back and said (and take this completely for what it's worth), that the rep told him that 75% of the PC's get a Zip drive added. PS Broker Number One bought her Dell and Zip drive 16 months ago. PPS Didn't see it posted, but then again I skip most, but KE sold another 300,000+ shares. 2+++++++++++++++++++++++++++
Subject: Re: 1% failure I just have to answer this. I'm a Master Mechanic, I've worked in all three of the major dealerships, and two of the foreign dealerships. the failure rate in all cars is very low, what happens is that a particular part, (Say a transmission bearing) will fail, this affects a limited number of cars, but ALL of these cars have experienced A failure, so although the dealership will sell 1000 cars, only the model with that particular transmission will come in for repair,say that of the 1000, only 100 of that particular model, of the 100, only 10 with that type of transmission, of that type of transmission, only the ones made in a particular plant, on a given number of shifts will have the bad bearing in it, you may only have a real failure rate of 1 out of 1000, the problem is miniscule, but the catch is the automotive maker must recall ALL the cars that have the transmission made during those few shifts, and so the ammount of actual failures is dwarfed by the ammount of cars that are repaired to ensure that they DON'T fail.in other words , a real failure of 50 units , will mean a repair of 10,000 cars to ensure that they DON'T fail. ATTENTION LeLunchbox, these are REAL figures, based on REAL recalls. no made up figures here. 3+++++++++++++++++++++++++++
Subject: Re: 1% failure (Definition?) By the way, IF the Zip failure rate is 1%, I never know how that 1% rate is defined. It probably is the number of Zip drive returns that Iomega receives in a period divided by the number of Zip drives Iomega ships and sells (sell-through) during the same period of time. The failure rate, if so defined, would be skewed if the Zip shipment and sales (sell-through) are not constant and that NOT all rejects (including DOAs) are discovered and returned to Iomega soon enough. The failure rate would be understated and look smaller during periods of increasing shipments and sales, and would be exaggerated and look bigger than it actually is during declining shipment and sales periods. I wonder if the Zip failure rate, if so defined, just became more noticeable to Iomega in the past few months coinciding with the first ever period(s) of declining overall Zip drive shipments and sales. More aftermarket retail returns (increased returns in 1Q98 from record high 4Q97 sales) coupled with reduced aftermarket retail shipment and sales (in 1Q98). The actual failures of Zip drives would be lagging behind shipments and sales if NOT all Zip failures (including DOAs) are discovered and reported to Iomega immmediately. I wish I know how the failure DISTRIBUTION looks like over time for a typical batch of Zip drives. The failure rate could also be defined as the total cummulative number of Zip drives returns Iomega has ever received divided by the total cummulative number of Zip drives Iomega has ever shipped and sold. That rate would be less reflective of the latest performance though. 4+++++++++++++++++++++++++++
Subject: Re: Misc. In article <1998043023252500.TAA21149@ladder03.news.aol.com>, wesell4you@aol.com (Wesell4you) writes: >"It's the disk's stupid.." >>At $79 they might not be making a killing but, IMFO they will be getting alot of product out there. Great. It's the disks. Can you tell us how many additional disk would need to be sold to make up for the lost margin on the drives? If the disks are such a "Cash Cow" then why are the gross margins so low? Shouldn't the tie ratio grow and grow and grow? At this point the tie ratio should be.......well very large in comparison to what it was 1 year ago. This should be producing $$$$$ to the GM yet the percentage GM still remains low. Could it be that current drive margins are eating all the disk GM? I'd have to say yes. Could it be tie ratios are trending down? I'd say yes. Tie ratios may actually start to trend up do to the lower number of drives being sold. When I speak of tie ratio I am talking about a snap shot view. Say 1st quarter disks sold divided by 1st quarter drives sold. So not only am I talking about disks sold with the current drives or bought during the quarter by their new owners I'm also talking about the other 11-15 Million drive owners purchasing additional disks. Who's to say IOM will profit from the disks in the future? Nomai??? I'm sure IOM will contine to benifit from the disks but maybe not at the current levels. Just think how profitable disk sales are for Nomai. They don't have the drive sales to drag their profit down to nothing. 5+++++++++++++++++++++++++++
Subject: Re: SYQT is good for IOM harry stated: << ...I seem to remember you are very active in many computer related clubs in your area. I'm just trying to clarify that this was a purchase made by an ordinary individual. By that I mean someone who has had not been infulenced by this forum, participants of this or any IOM related forum. Bascially Nick I'm asking if you at anytime discussed with this person the virtues of Zip? If one of my local schools or colleges were about to make a major computer purchase or any computer purchase would they include Zip as standard? I don't know. My guess would be no. >> When I talked to him, I was his student in an internet web page class not at Mesa College but a Continuing Education facility and was already familiar with ZIp and Jaz drives and had already purchased some of them for college use the previous year. I wad just asking him questions about his opinion of the products and what his future use and/or purchases would be. He told me then: "I wouldn't buy any new computer PC or Mac without a ZIp drive andsome without a Jaz drive." He also is in charge of all of the purchases of computers, printers, scanners, routers, servers, etc. for Mesa College, then entire college, for faculty, staff and student use. The college has about 20,000 to 22,000 or so students. He is very knowledgeable about PCs, MACs, Networks, etc. and has served in that capacity for several years. I also met him when I taught several computer courses there in spring of1997 but only briefly then. I suggest you contact the colleges in your area and see what they are doing with respect to Zips and Jaz installation. My guess is it is nationwide because of the usefulfullness tro students who have assignments, term papers, experiments, engineering, medical and dental students, chemistry, geography, physics, etc. and the use of the internet to secure data and info for their class needs. One disk for all classes. It is mushrooming. For example, I am teaching business law this year and the book I have has web sites at the end of every chapter pertaining to the subject matter of that chapter. The same book by the same authors did not have the websites the previous two years and more. I give my students legal research assignments so that they learn how to look up the law at anytime in their life, not just learning legal principles which they may forget after graduation or sooner.The use the internet and the law libraries both. Many have Zip disks and some have floppies. Incidentally, I use Iomega's history, litigation, board actions or inactions in the classroom to tie many of the subjects together in a meaningful way. I hope this is helpful to you, Harry. 6+++++++++++++++++++++++++++
Subject: 1% in perspective This 1% stuff is getting stretched way out of proportion in my opinion. There are some posts talking about 1% component failures, vs some discussing 1% finished product failures. This is not an apples to apples comparison. Where the "grey" area exists is the Zip as a component or a finished product. The Zip failure rate mentioned by IOM (as LESS than 1% and in sort of an off hand way in repsonse to a question), presumably includes all zips (internals to OEMS, internal retail and external retail). ALL Zip drives, period. NOT 1% of all the parts in a zip drive. Any time I can walk into an electronics store, buy 100 of any individual finished electronics product, and only have one "failure" (i.e. one that was d.o.a. OR one that broke during the warranty period) then I would be extremely happy. Maybe I don't expect much anymore, based on my own experience (see my monitor post earlier). My experience, whether it be cars, computers, telephones, audio, etc., is that out of every 100 products I have purchased, I would be pleased but shocked if LESS THAN 1% of them ever required repair during the warranty period. I mean think about it, you can't even buy a hundred light bulbs without getting one that burns out way before the rest. This does not excuse a company that ships something out the door that didn't work when they boxed it up, which I don't believe IOM does. Comparing this situation to a hospital or a doctor is ridiculous. Not even on the same planet. You mean to tell me that you think that doctors are 100% infallible or it results in death? Get serious. How many times have you had medical treatment that was basically "trial and error" (see if this works, if not then try this.... ). 7+++++++++++++++++++++++++++
Subject: Re: 1% in perspective isnt 1% of 13 million Zip drives 130,000 defective Zips? ata $50 manufacturing cost (a pure guess..) thats a $65 million dollar acceptable defect rate since the products inception.. Sorry.. but that's not acceptable in any company I run, or own shares in.. Think about it.. thats .25 per share thus far in earnings, or MORE than IOM will earn in all of 1998 (way more...) The commitment to higher (6 sigma) quality standards is required and inevitable for a company aspiring to be the standard.. The more I think about it.. dumping Edwards for a manufacturing guy might not be such a bad idea going forward.. even if for perception sake only.. 8+++++++++++++++++++++++++++
Subject: New BW article Lots of suggestions and opinions here about Zip, Jaz, Buz and, um.... SparQ 05/11/98 STORAGE SPACE FOR A SONG When your hard drive can't take another byte, it doesn't cost much to make room aol://4344:109.B3577043.23796313.578434866 9+++++++++++++++++++++++++++
Subject: U.S. News Pans Digital Photography... Latest issue of U.S. News...May 4, 1998, Pg. 71-72...(with a teaser at the bottom of this page...) Weird Title ("don't click?)..."Digital Darkroom: Digital cameras don't click; buy a good scanner and printer" save your time, get a good printer and a good scanner... HPs work great, so do Canons... "30-70% of digital cameras are returned"... due to poor quality of the photos, cable hook ups, flash memory expense, etc. Clik! could open the door...hello, IOM? watch the hook ups... only 6-10% of film cameras are returned it says... Mentions Mavica by Sony but neither good nor bad... Mentions how using the HP 722C, Canon BJC-7000 and Epson Stylus 600 "photo quality" printers can take a while to actually print! A 10 megabyte image took under 8 minutes for the HP, 10 for the Canon and 11 minutes on the Epson... No matter which way you go (flash or Clik!), printing STINKS! Teaser... since they mention how bad the digital images are and then recommend going to scanners and printers...storage is a major problem... ..."the only bad news we see in this set up (scanner and printer): You'll fill up a hard drive pretty quickly." (A story on storage will appear in the next issue of U.S. News.) Maybe some good news for IOM...although, in recent months I've seen a lot of advertising for SPARQ. 10++++++++++++++++++++++++++
Subject: Germany notes Just back from an 8-day business trip to Germany. Mercedes 320S was fantastic, especially at 240 km/hr on the autobahns.... :-) Not much chance to do channel checks, but here are a few observations: I could not manage to connect to AOL using my PowerBook, because the modem would not recognize the dial tone. Have not had this problem recently in Mexico or Japan. AOL has local numbers in many of the cities I visited, but no luck in any of them. At the conference I attended the first two day in Irsee (south of Munich), there was a PC set up in the conference office. It had an external Jaz 1gig drive attached. No other removable storage used. I stopped in at the "TechnoMarkt" (a mini Circuit City) in nearby Kaufbeuren to look for phone cables. The had Zip, Jaz 1gig, and Ditto (several each) locked behind glass in a cabinet. CD and optical drives also available, but no sign of any direct competitor to IOM. At a small startup co. in Heidelberg, 2 PCs being used. One had external Zip. No other removable storage used. We made use of the Zip to transfer data between the PC and my Powerbook. More than a dozen disks sitting about, and more were kept in a drawer. Pretty good tie ratio.... Zip and Jaz on display in the window of a small computer store in Aachen. No competitors visible. Numerous Zips and Jaz drives in use at Philips in Eindhoven. No competitors seen. Colleague at the big German research center in Juelich had a Gateway with a built-in Zip. On the whole trip I saw not a single sign of Syquest or Imation products. But my impression is that there is a lot of room for additional sales in Germany...which is about the most advanced country for computer use in Europe. PS Thank goodness for LeLunch....with 750 posts to catch up on, skipping his made the job a LOT quicker... :-). 11++++++++++++++++++++++++++
Subject: Zip Starter Kit I don't remember anyone mentioning that there is a new Zip on the Block. Today I was at the Best Buy in Evansville IN. They had what I beleive is a new IOM Product. Zip Starter Kit. You get a PP Zip drive 6 Multi Color Disks and RecordIt all for $199. It was a very big display. I sure hope this is not some type of attempt to stuff the channel with new SKU's. We already have the new retail ATAPI drive and now Zip Starter Kit. I actually like the idea of the starter kit. Anyone have any thoughts on how this might infulence the inventory levels? Could this be used to put more product in the channel? Does each new SKU allow IOM to book revenue for up to 4 weeks of estimated channel inventory? Since this is a new product who decides what is an acceptable level of inventory? If it has been discussed and I missed it please clik on past this post. _______________________________
End Report. Posts covered through 9:00pm ET 5/3/98
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