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Monday, July 07, 1997 Thursday, Iomega closed at $20 7/16, up $1/2 (+2.51%). THIS WEEKEND'S RECAP: The board was quiet over the Fourth of July holiday, for the most part. A few posters began to discuss potential impacts on 2Q earnings for Iomega -- including the Jaz disk recall, competition and OEM demands. The board took a political bent over the weekend as well, but many folks were able to return to the topic of the stock, particularly on the subject of readable/writable CD-ROMs as a new concern for Iomega shareholders. Of particular interest, covering all of the above-mentioned topics, are the two posts from Steve24601 -- these are comparisions of "cost-of-ownership" depending on the size of storage compared. Enjoy! INDEX:
1++ Steve24601 does a comparison of storage costs between Zip, Shark and
Jaz drives
Recap written by TMF Weekly; posts
compiled by TMF Weekly. As always, the following posts represent the thoughts of our contributors, not those of The Motley Fool. And now, the Best of the Board...Started 9:01pm ET 7/2/97.
1++++++++++++++++++++++++++
Subj: Shark bites? I lurked around only to see many shark stories. Today at work, I got a catalog from Dell with Zip, Jaz, and Sharks for sale. I thought that it might be interesting to see how the products match up on a total cost of ownership basis. If an analysis like this has already been done, forgive me. Data assumptions Zip = $149. 10 Packs of disks = $145, or $14.50/disk Shark = $289. 3 packs of disks = $81, or $27/disk Jaz = $399. 3 packs of disks = $285, or $95/disk Cost to store 1 GB Zip = 149 + 9 disks @ 14.50 = $279.50 Shark = 289 + 3 disks @ 27 = $370 Jaz = 399 + 0 disks @ 95 = $399 Cost to store 3 GB Zip = 149 + 29 disks @ 14.50 = 569.50 Shark = 289 + 11 disks @ 27 = 586.00 Jaz = 399 + 2 disks @ 95 = 589.00 Cost to store 5 GB Zip = 149 + 49 disks @ 14.50 = 859.50 Shark = 289 + 19 disks @ 27 = 802.00 Jaz = 399 + 4 disks @ 95 = 779.00 Cost to store 10 GB Zip = 149 + 99 disks @ 14.50 = 1,584.50 Shark = 289 + 39 disks @ 27 = 1,342 Jaz = 399 + 9 disks @ 95 = 1,254 So, as you can see, the total cost of ownership of the IOM products (assuming that all products have the same ease of installation, defects, etc) is lower at all points than the Shark. Surprisingly, all products have similar TCO at the 3 GB level. Even more surprising is that Zip remains as competitive as it does at the 5 GB level. So, even if you throw the disks 50 feet or so, Zips can take a bite outta the Shark (not an intentional reference to the Tyson fight, but...) FWIW - the moral of the story is to check your TCOs before you buy. 2++++++++++++++++++++++++++
Subj: Re: Zip and ADSL <<IMHO......Internet success = IOM success.>> << I agree. I went to an internet cafe just north of Dallas a week ago to play with the machines that are using ADSL modems and lo and behold, they're equipped with ZIPS! You take your Zip disk and download!!! Zips and broader bandwith just seem to go together. :) >> Very important post here IMO. Supports in a big way my findings on the popularity of Zip Drives and the portability and swappability of Zip Disks among High School students. Iomega will be very difficult to catch now, notwithstanding the gradual emergence of competition. As long as Iomega remains the dominant market leader in what is clearly a huge and growing market, its OK to have some competition. Intel and Microsoft have competition but they are market leaders and have the advantages that accrue to market leaders. The big dividends for market leader Iomega are about to be realized. Ron Sirch 3++++++++++++++++++++++++++
Subj: Re: Honest Opinion on CNBC BlckMarlin wrote: << I should have been more specific...More internet activity = more archiving = more secured backup = more success for IOM products. >> No need to clarify. I followed this line of thinking as I wrote my previous post and I agree with it. The problem is that the current product will only be useful for a finite amount of time. Let's take that 3 year window you mentioned: My computer is three years old. It came with a 500mg hard drive, and I can tell you that for the longest time, I only used about 200mgs. For my needs, a 100mg Zip is incredible... great for archiving/storing and tranfering data. Many of today's computers come with 4gig drives. (4 gigs!) For many users, it takes a LOT of Gifs and Jpegs to fill that baby up. The speed of the average consumer's computer/phone lines restrict the feasible size of a file to be tranfered (i.e., downloaded.) Granted, your backup argument still stands, I believe that many users are lazy when it comes to regularly backing up data. << Consequently, I see the internet not as a competitor but rather as increased opportunity. I believe that as the net grows, you will use your Zip/Jaz more often. >> True, as the speed of computers and comm-lines increase, the power of the 'net will increase, but so will the average file size (via multi-media, information rich, yada yada yada, docs,) and therefore the size of a computer's primary storage device (read as hard drive.) In 3 years time a 4gig hard drive may be viewed as small. In this situation a Zip may help, but in the future there wil be many other ways to distribute information. Picture if you will... In the future, it may be easier to email a 100mg file to your next door neighbor rather than sneaker-net it. People may store their information in centralized data banks, simular to the way people use a public library rather than keep their own collection of books. Don't forget the new Application Distribution companies (help still... I forget their names ) that are forming today. In these situations, the 'net is a direct competitor of IOM's current products. Enough of a futurist tangent... Try this... the 'net and Zips are like lower interest rates and the GDP: good for near term zip growth/usage, but like an inflated dollar, not as useful in the long term. (Oy! A slight stretch, but think about it.) 4++++++++++++++++++++++++++
Subj: Re: No news, good news? << From: JackofYork Since IOM has not issued any news on any earnings worries or anything associated to the Jaz recalls, can we assume all is cool? >> If you're asking; that since IOM has not stated that they will not make "estimates" can we assume they will make estimates, then my answer would be no we cannot assume that. Iomega does not give analysts guidance and as a consequense (the last time I asked them) they don't do or say anything that would indicate that they give recognition to the analysts reports. I believe they have their own internal estimates, but do not recognize the analysts, (since they don't provide them guidance) therefore, why would they comment on whether they will meet those analysts estimates? It's not a situation that I like, but I believe that is the way it is. Anyone wishing to confirm may call Susan Stillings. Herb Greesberg's statement notwithstanding, Susan or someone else will return your call. 5++++++++++++++++++++++++++
Subj: Re: No news, good news? I believe the jaz recall will be accounted for in the numbers. However, I believe that the analysts have already factored in the charges. Unless the charges are a lot higher that the $.03 most were expecting, the stock should not react either way to this news. On the other hand, the $.18 to $.20 (estimate before charges number) is very significant. While nothing is certain in the market, I agree that no pre-announcement of negative earnings is probably good. I don't expect IOM to blow away numbers , but I think they will do well enough to make the analysts look smart and leave them room to upgrade future earnings. Many of the old stockholders should recognize that the stock is trading different than it used to trade (frenzy days with shorts involved). No one knows where the stock will be in 1year, let alone 5 years, BUT the analysts and IMHO the company are going to do their best to make sure that conservative and easily attainable expectations are set. This way they assure a long and steady rise in stock price when the company grows like they have in the past. Stay long, reduce your short-term euphoria, and focus on the 6 month outlook and you should make a lot of money on IOM. This is just my outlook and opinion. 6++++++++++++++++++++++++++
Subj: shark attack part II Let the total cost of ownership contest #2 begin Contenders data (external) from June PC magazine or latest MicroWarehouse, Tinger, Pc Connection, Global Supply catalog on my desk, so if pricing data is incorrect flame Micro Warehouse or PC magazine, not me). I also omitted many of the competition listed in the May PC Magazine article as I could not find "street" prices for the drives. Cost is in dollars, without any shipping prices, NOT taking into account any rebates. Jaz: drive = 400, disk = 85 at 1 GB Zip: drive = 150, disk = 14 at 100 MB LS 120, drive = 190, disk = 17 at 120 MB Ez230, drive = 240, disk = 23 at 230 MB SyJet, drive = 500, disk = 118 at 1.5 GB Nomai540, drive = 350, disk = 50 at 540 MB Shark, drive = 289, disk = 27 at 250 MB The results, 1st number is cost, second number is rank, thus, Jaz at 1 GB reads $400 TCO and places 4th. I wanted to color code all items, but the Blue on my monitor fritzed out., so, color emphasis (what passes for red on my monitor) to the winner only, 1 GB 2GB 5GB 10GB 20GB Jaz 400/6 485/4 740/1 1,165/1 2,015/1 Zip 276/1 416/1 836/4 1,536/6 2,936/6 LS120 326/2 462/2 887/6 1,601/7 3,012/7 Ez230 332/3 608/6 1,183/7 1,229/3 2,218/4 SyJet 500/7 618/7 854/5 1,208/2 2,034/2 Nomai 400/6 500/5 800/2 1,250/4 2,200/3. shark 370/4 478/3 802/3 1,342/5 2,422/5 overall rankings. By adding each of the rankings together, the lowest total should represent the lowest overall TCO. The best score would be a 5 (placing 1st at all 5 levels) and the worst 30 (placing 6th at all 5 levels). Jaz 13 Zip 18 LS120 24 Ez230 23 SyJet 23 Nomai 20 Shark 20 Comments: again, I am surprised at how competitive Zip is out the 5 GB level. Of course, if IOM can hit the sub-$100 price point, it would move up at the 5 GB level into a solid 2nd place behind Jaz. I'd find it hard to manage the 50 Zip disks required at that point, but wow. Something to consider. Also, I am pleasantly surprised once again to see Jaz ranking well at the lower storage levels. Lastly, the PC Magazine article's calculations of cost per MB of storage is not totally inaccurate. The cost of the drive itself is as important to the calculation as the cost of the disk/cart. What does this mean for IOM? IOM has clear TCO advantages over all major competitive products and really should emphasize this point to users. TCO is the current buzz word in the market today and IOM should fight hard to make sure that the public understands that IOMs products are well placed. PS HYPEMENOT (I think) wanted to remind us that Shark has a $50 rebate, and I recall that EZflyer's got a $55 (?) rebate. Since I did not remember the exact details, I omitted these elements. 7++++++++++++++++++++++++++
Subj: Zip: The de facto standard. The July 1st issue of VARBusiness contains a long (~7pages) article entitled "Multimedia Margin Boosters -- Implementing storage solutions for customers' multimedia systems can earn you hefty profits." The link is: Multimedia Margin Boosters [http://www.techweb.com/se/directlink.cgi?VAR19970701S0059] The article claims: Multimedia storage sales offer VARs higher margin opportunities than do simpler storage sales-often two to three times as much. The bulk of the article deals with the current high-end products. Toward the end of the article a section is devoted to the Desktop marketplace. Jim Porter, president of DiskTrend Inc., a Mountain View, Calif., market research firm, points out that transmitting full-motion, full-screen video on a desktop system requires a sustained data rate of about 5 Mbps. That's well within the range of a modern SCSI controller, [I believe the Buz claimed 20 Mbps] but it still means a heavy storage requirement. "Usually, the user will require an Iomega Zip or Jaz drive, a SyQuest cartridge drive or a WORM drive of some sort. Zip disks, for example, have become a de facto standard for exchanging images and other graphics between multimedia sites." Clay Hagan 8++++++++++++++++++++++++++
Subj: Re: Ricoh Media Master << Didn't I read that these CD-RW discs are not readable from (some) CD-R drives?? No rumors, please. Just the facts. >> Some facts about the Ricoh MP6200S CD-Rewritable drive. SPECS: Ricoh's CD-RW speed is 6x read and 2x record, with an access time of 350ms and it has a list price of $599. "E-Media Magazine" (July, 1997) describes its copying of large files as "a bit slower than writing to PD, but speeds are still respectable". Test results for writing from hard disk to CD-RW were: 4.7MB (191 files) took 44.18 seconds, 28.6MB (1 file) took 3 minutes, 15 seconds. WRITE LIMITATIONS: The drive ships with Adaptec's software DirectCD 1.0. To again quote "E-Media Magazine" (July, 1997) - "CD-RW is not, at this point, a random access read/write optical medium like MO or PD. Although it has the capability to be randomly accessed in a read/write fashion - actually to erase a certain portion of the disk and write to it again - this software-enable support is not yet available". Basically, the only option available at this point in time is to erase the entire disk and start over. This is still a big advantage over CD-R where the disk was trashed if a write error occurred during recording. Future releases (DirectCD 2.0) will allow for random erasing on a file by file basis, but the incredibly slow access time of 350ms will result in even slower read/write times when this feature is utilized. COMPATIBILITY: Due to the much lower reflectivity of the surface of CD-RW media (15% reflectivity) compared to the current generation of CD-ROM disks (75%) and CD-R disks (65%), none of the current CD-R drives or CD-ROM drives shipped on computers can read disks recorded with CD-RW drives. Only new CD-ROM drives that bear the "Multi-Read" designation will be able to read CD-RW disks. This is a new CD standard that has just begun shipping on some of the latest computers. But that still leaves disks recorded with CD-RW unreadable by the millions of current CD-ROM drives shipped thus far. CONCLUSIONS: Given the speed, price, compatability and write limitations, CD-RW does not seem poised to go mass market, but instead appears destined to remain a niche product. It will undoubtably find a small market, but that market will in no way ever conflict with Zip or Jaz. I hope everyone enjoyed their 4th of July as much as I did! 9++++++++++++++++++++++++++
Subj: Re: Ricoh Media Master << I have a Pentium 133Mhz computer, which is much more than I need at home. But, should I've spent twice as much to get something I don't need? Tell me you IM-BE-CIL. >> That I don't know Melissa....but I don't think that decision will be ours in the long run anyway. It will be the box makers who'll decide what to package with DVD. I'm just a little more sceptical about ZIP than I was 3 months ago. CDR has tumbled from near a $1000 to under $500 in one year. I really think this board is dismissing CDR too readily, as I was 3 months ago. At $300 OEM (consider that a $50 to $100 OEM CD goes into the machine anyway), it really isn't all that much more expensive than packaging a ZIP and a 16X CD. And its has an installed base far greater than Zip....By Christmas we could see the OEM CDR being price competitve with an internal JAZZ with the media one heck of alot cheaper even if it isn't rewritable. You can buy 25 CDR disks for $99 now. That's the equivalent of 12 Jazz disks ($1200). What if IOM does release the 200 Meg Zip? Will it be cheaper than the present Zip? I doubt it. If it retails at $199 for the 200 Meg and appears around Christmas and is fighting for a place with CDR selling for $399 retail, it will be interesting to see who wins. Will IOM try to OEM the 200 Meg ZIP or will we have a 200 Meg consumer model and a 100 Meg OEM model? Ultimately, what do box makers think will sell easier. A $2000 box that has a Zip or a $2000 box that allows you to make your own CDs (including audio) that you can distribute to your friends or lug around for personal use on another computer/CD player. There are several marketing angles here that would favor CDR in my eyes as long as they don't offend the royalty gods and Congress gets involved again. _______________________________ End Report. Posts covered through 9:00pm ET 7/6/97 _______________________________
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