Post of the Day
March 26, 1998
From our AOL
Subject: The Good and The Bad
Friends, Utes, Iomegans, lend me your screens
I come to bury Edwards as well as to praise him
The evil that CEOs do lives on after them
The good need not be buried amidst their golden parachutes
Kim Edwards reign over Iomega was marked my great success and we must not forget that. He helped grow the company's revenues 12 fold in just three years. He rescued a ship that had been wrecked on a sandy beach years before. He brought us hope and even some wealth (although it was a lot more wealth a couple years back).
- He did much good for Iomega and its shareholders.
- KE should've buried SyQuest
- Focus, focus, focus
He also did much wrong. As we dissect and analyze that, let me say we have the benefit of hindsight, which is better than 20/20. But where we second guessed along the way, we have the write to gloat / to be angry / to criticize. We also must look ahead to the future and what the new CEO must do.
The company was down and all but out. It was on the ropes and bleeding from both eyes. KE should've punched it into history. He declined and the result is that SyQuest is alive and gaining strength. It may be losing money, but it's raising enough to stay alive. The result is a Jaz business in disarray, a Zip Plus business struggling against a much cheaper alternative media-wise, and perhaps even slowed Zip adoption at retail. Regardless, SyQuest could've been erased and KE declined to flip the pencil over. A very bad legacy.
There is, in business, the notion of core competencies, i.e. What is this company good at doing? A successful business often focuses on its core competencies, especially as it tries to grow. Once it loses that focus, bad things tend to occur. Resources are wasted, attention is diverted, etc. Buz, Recordit and possibly even clik are examples of lost focus at Iomega. Zip is still it and when the company reorients itself in that direction, good things will flow forth.
This company is an operational backwater. That doesn't come as much of a surprise given the rapid growth. But please, can we get this thing figured out for a change. Product delays, product delays, product delays... Enough already. Tell us when you ship it, stop Microsoft-ing us with announcements well ahead of the fact. That way we can't be disappointed.
KE knew better. Too much better. He knew his pricing on Jaz was fair and right. He was totally and completely wrong and blind. When Jaz arrived, 10 cents/MB was fair for media. Today, it is insanely high. Jaz will never cross over at these prices. It is not big enough in base to be a cash cow, either. Nutty decision-making. This is but one example.
The ad campaign sucks. And I'll tell you why. KE said that if people don't know why they need a Zip, price cuts wouldn't help. Well I don't know how the ad campaign is selling Zip drives... The Zip is good for:
1) backup of important files
2) archiving of data when your drive is small
3) transport of data
4) inexpensive removable media ($10 bucks a pop)
Tell us about those things -- specifically -- and explain how they are valuable. Or else don't bother wasting the money. I'm sure OEMs wouldn't mind the price cuts at all. Iomega could've taken $10 off the price of 10 million OEM drives in lieu of the increased advertising. I bet that would still sell a lot of drives to OEMs, don't you?
Which get us to price. Which Iomega doesn't seem to understand anymore. Jaz and Jaz2 are ludicrous, especially the media. Zip Plus is comical. Zip is now expensive relative to the price of a sub-$1000 computer. Iomega needs to wring out costs like crazy. And it needs to sacrifice some margin now to lower prices. Real companies that go on to dominate their markets often have to do that. The Zip has been made like 15 million times by now... It isn't complicated... Where is the single-chip circuit board? Price, price, price follows focus, focus, focus on the list of the top 10 most important things for Iomega to deal with. Microsoft raises prices over time because their is no choice for OEMs. In the beginning, they made it too cheap to say no, too cheap to select DR-DOS, or Geoworks, or MacOS for that matter.
Pry, lie, cheat, steal, maim, spindle, bend, fold, mutilate but do whatever it takes to get a real OEM deal that goes the distance. Dell will sell about 6-7 million computers this year and somewhat more next year. Get a Zip in every last one of them on the desktop (maybe 5 million or so). Pay the money to do it. Make it happen. Prove that people care. That is worth more than the ad campaign. Hell, offer the deal to Dell and Compaq and tell each that whoever signs up first gets the deal and sweeteners going forward, the other will have to pay their fare going forward. You want to win then play to win. Don't play the same prissy game of "Please, Compaq, give us one more SKU....." Make it happen, you did with Micron. It cost money today. So what. It was worth it. Now fry a much bigger fish or stop telling us your No. 1 priority is more OEM Zip sales.
Spin it out of the company unless you intend to make a Zip caddy for it. If not, it's an annoying distraction. You're not gonna build it yourself anyway. If you're not willing to make it Zip compatible or spin it out then kill it. Zip is it, for crying out loud!