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Thursday, May 7, 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. Wednesday, Iomega closed at $8, unchanged TODAY'S RECAP: Iomega's clik! drive continued to be a main topic of conversation yesterday on the AOL message board as posters debated the potential impact, niche, and even usefulness of the drive and disks. Other posters looked at clik! competition, the tie ratio model used for Zip disks, and the ZipPlus return policy recently implemented by Iomega (see post from TMF Turk). 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 argues against the razor blade model for Zip tie ratios and
proposes the Barbie model
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 5/5/98. 1+++++++++++++++++++++++++++
Subject: A bold new market plan! For all the verbiage that has been expended here on the razor/blade model ... it has only just now occurred to me that this model, in its purest form, is fundamentally flawed as a Zip market plan. Razor blades are inherently disposable commodities with a useful life of about 7 - 10 days. The tie ratio is open-ended for the lifetime of the consumer. Whereas, a single ordinary Zip disk -- supposedly large enough to hold "all" of your stuff, and sufficiently durable to last indefinitely -- has a useful life equal to the lifespan of the drive itself. The Zip tie ratio is, therefore, inherently small and self-limiting. A far, far better model for the Zip Drive/Disk market plan is Barbie. The typical consumer -- not to be confused with collectors or speculators -- owns one Barbie (Zip Drive), one Ken (Jaz Drive) and eventually, maybe, one Midge or Skipper (Clik! Drive). Mattel probably sells the dolls barely above cost, smugly secure in the knowledge that the real margins are to be found in the accessories tie ratios. Still, very much like Zip, Barbie's tie ratios are finite and limited. For the most part, Barbie products are collected and preserved in perpetuity -- very rarely replaced due to wear and tear, or failure out of warranty. Admittedly, I don't have firsthand knowledge here, but I'd hazard a guess that the average 8-year-old girl does not actually accumulate one new Barbie's Malibu Ranch or Corvette or Space Shuttle every single week without fail. Such acquisitions are limited -- at first, by the consumer's (or Mommy's) financial resources, and later, by the consumer's attention span, which evaporates roughly at the onset of puberty. Similarly, the high cost of Zip disks precludes routine purchases on a whim. At the same time, the product's very capacity and reliability removes any rationale for the consumer to keep their collection churning and growing beyond a certain core quantity. If we accept the Barbie model as our new market plan, it becomes transparently clear that there is only one way that Iomaga can hope to grow their market now: Create appeal for the collectors and speculators! Collectable Premium Zip Disks! We're already seeing fluourescent color being used as a selling point. Granted, Hot Pink and Peach Sherbet have the advantage of being royalty-free. But Iomega must now move beyond that timid first step and boldly leap to the next level: Buying Zip Disks must become associated with owning equity in hot media franchises and popular culture! For example, let's say you want to target the 14-year-old female demographic. Release a numbered, limited edition of disks featuring embossed or silkscreened pictures from the motion picture Titanic imprinted on their plastic shells, and a collection of Leonardo DiCaprio JPEGs stored inside. The possibilities are endless: Silver Surfer Zips. Rugrats Zips. Spice Girls Zips!! Beanie Babies Zips!!! Teletubbies Zips!!!! Targeting the college-age consumer? Zips co-branded with the Budweiser logo. Upscale consumers? The BMW logo. Sports fans? Limited-run disks for each and every major league baseball team. Collect the entire set! Right-wing political junkies? Rush Limbaugh disks! Women? --- Mmmmm --- never mind. I'll let someone else walk into that minefield. But the point is this: If your tie ratios are stubbornly low, you have to grow the market by increasing the perceived value of the commodity as a collectable investment. Mattel gets it: Last year, they sold Star Trek Barbie sets for $100 a pop. Meanwhile, as our management team sleeps at the wheel, you can bet that Syquest has already planned to release a Year 2000 Commemorative Sparq disk -- complete with a commemorative software fix for the Y2K glitch that still plagues its installed base of DOS 6.22 operating system users. Wake up, Iomega! (And that *&^%*ing "Rescue Iomega" contest is ancient history now. Drat.) 2+++++++++++++++++++++++++++
Subject: Re: Sandisk Answer Questions << One thing we shouldn't forget, SanDisk has the same positon in Cameras that Zip has in the PC market. It's entrenched, especially in the next generation of high res cameras comming out this Christmas. Reminds me of the kind of situation Sony will have when they compete with Zip. >> I think there is a huge difference. Zip has a very large market share in a pretty mature market place. CompactFlash (CF) has a large market share in a fledgling market place. Digital camera sales are counted in the thousands not millions. The reason, imo, is that they are too expensive and deliver poor quality. One of the main reasons they are so expensive and deliver poor quality is that the storage is so expensive. Clik being so much cheaper and bigger would allow for better image quality and reduced cost. Cheaper, better image producing digital cameras could catch on and the market place could explode. That is the difference, the digital market could triple or better if mass consumer needs are met. If the market triples, CF's 60% market share is then only 20% and new entrants have plenty of room to displace and dominate. If your analogy is correct then you would have to argue that Sony HiFD would make computers so much more attractive that PC sales triple over a short period of time. I don't see that at all. The correct analogy for Sandisk and CF is SyQuest 270 MB. SyQuest had dominat market share in removable storage but the market was counted in thousands. The Zip drive met mass consumer needs and exploded the size of the removable storage market. The new size of the market made SyQuest's formerly dominant market share meaningless and Zip filled that vacuum. I have no idea if Clik! will be as successful as even Jaz. What I do believe is that Clik! has a shot to ship this year and it does seem to be an attractive add-on and possibly even OEM product for many hand held digital devices. I further believe that none of that potential is in the current stock price. 3+++++++++++++++++++++++++++
Subject: Re: Sigma six initiative? (Clik! & Photo Quality) NovW writes: << With Clik! drive, with the ability to hold many more Mega Pixel pictures, with the ability to do so cheaply for the camera manufactuers, and more importantly, with the ability to allow consumers add more $9.95 Clik! disks inexpensively to hold even more Mega Pixel pictures, it may now make sense for camera manufacturers to make more digital cameras at lower costs that COULD take Mega Pixel pictures. >> Great work. My point was more directed at Larry's situation with his Kodak DC-50 that he currently has and uses. My comments were more directed toward the possible uses or benifits of an external Clik drive for an existing installed base digital cameras. I attempted to point out that given Larry's situation with the DC-50 it would appear to make sense to purchase additional Flash memory instead of waiting for a external Clik drive. For about the same money Larry would have the added benifit of more storage today. No need to wait 8-12 months for Clik to show up at retail. Remember even when Clik gets here it will not be a proven technology such as Flash. Case in point Zip Plus. Larry's camera does not have the resolution of cameras that will come to market in the next 6 months and it never will. No amount of storage will ever imporve current digital camera resolution. I've just been thinking out loud about Clik and its potential market. The more I think about the EXTERNAL drive the more I question is place in the market. Do you have any thoughts on where Clik external fits in the marketplace? How big will the market be? I'm saying very small. OEM is it for Clik IMHO. 4+++++++++++++++++++++++++++
Subject: Re: Sigma six initiative? (Clik! & Photo Quality) HRPlbg -- << OEM is it for Clik IMHO. >> Not like that is such a bad thing, if true. The external Clik! may be a niche product aimed at consumers that already own an electronic device in need of more storage. The real money to be made is in the OEM use of the drive. Then IOM can concentrate on selling only the high margin disks, and not be weighed down by manufacturing the low margin Clik! drive. Clik! is being considered for many types of electronic products, not just cameras. However, just the camera market alone will be quite lucrative. Not that I ever had much respect for the opinions of John Dvorak in the past, but those of you who do you might like to read this tidbit from PC Magazine (May 8, 1998): PC Magazine: Inside Track (05/05/98) http://www8.zdnet.com/pcmag/insites/inside_track/it980415.htm "The Digital Camera Boom Is Coming (Part 10) Dept.: Dataquest is predicting that over 5 million digital cameras will be sold in 1998, up from a hefty 2.08 million last year. Supposedly these are going mostly to business users, so the market will explode when consumers get into the act. The current leaders are Kodak and Olympus, and both have an excellent line of cameras. Look for Canon and Nikon to get more aggressive with their offerings.Nikon is bringing out a line of cameras that will feature real Nikon lenses and real camera controls so that photo buffs can reduce the time they spend altering pictures with Adobe Photoshop. Buyers should make sure the cameras use removable media. <snip>" Scary when even John Dvorak is getting the picture. ;-) And who does Nikon appear to be aiming at with their products? "Real" Nikon lenses and "real" camera controls seems to suggest that the consumer is demanding much more quality from a digital photograph. If so, those higher resolutions are going to require a lot of storage space, hence Dvorak's advice. Daffynition: Clik! - The sound of me skipping yet another inane post by lelunch. 5+++++++++++++++++++++++++++
Subject: Re: More Flash? (Try Clik!) NovW writes: << HRPlbg, do you imply that Larry can go out today and buy 20MB Flash for his particular digital camera for $185 at Retail? I don't think so. I think it may actually cost more. >> I posted earlier today the exact price I had found for Larry's type of camera. You not only get the Flash memory but you also get the adapter for $183.95. And you can get it today. NovW said: << Even if that is true, and if I were Larry, I wouldn't feel good about spending $185 for 20MB Flash knowing that I may soon be able to spend $200 for the External Clik! drive with 40MB, and that each additional Clik! 40MB would only cost me $9.95. >> You would not feel good spending $185 to make your current digital camera more useful? Are you saying that you would just wait until Clik comes out regardless of how useful the camera is today? If it were truly a pain to use the camera today with its limited (4MB) of storage wouldn't you buy more memory today? Waiting for a product that is on back order is one thing, waiting 8 months to a year is a totally different thing. I personally don't buy the theory that Clik will have huge tie ratios. I personally feel that people will only buy enough Clik disks to equal 5-6 rolls of film. The key being the resolution/file size produced by the camera. I'm not going to keep my photos on 40 Meg Clik disks. I'll more than likely transfer them to Zip disks if I keep them at all. In Larry's case an extra 20 MB flash card will provide him the ability to save 150 photos at the rate he described in his post. He posted 30 pic/4MB. So he would have the ability to take 180 pictures. No need to wait for Clik. Get it today, Use it today. The entire point revolves around the potential market for the external Clik drive. The more I think about it the smaller the market gets. Clik external will mainly target existing Digital camera users. Will existing digital camera users need additional storage? I've been trying to use Larry's real life experience with his camera to determine if there is a need. I believe that current digital camera users are relatively content with the amount of storage they currently have. They have bought the camera and quickly determined a minimum amount of storage they are willing to work with. If their requirements are greater than that which came with the camera they will purchase additional memory as required. They will not all be waiting for Clik. What percentage of digital camera owners actually even know about Clik? So If the present digital camera owners have a reasonable or workable amount of storage already what will compel them to spend $200 for a Clik drive? Just ain't going to happen. As I said before, Clik is an OEM product. 6+++++++++++++++++++++++++++
Subject: Re: imac no zippy << The offer of a free Zip Plus with 6 disks to replace defective Zip Pluses can't be that big of a deal yet. >> I believe you get a plain vanilla Zip plus the 6 disks in exchange for the Zip+. The "downgrade" in the Zip is no doubt the reason for the disks being offered up . There would seem to be little point in giving a Zip+ back to the consumer if the first one didn't work on his/her setup. http://www.macnn.com/contributions/zipplus.shtml _______________________________
End Report. Posts covered through 9:00pm ET 5/6/98
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