JAZ's tiny contribution to Q2 IOMG revenues
Young,
I'm relieved to learn that even you think that
$11.5 billion is too much to expect for IOMG's
1997 revenues. We're agreed, then, that the
exponential projection from the recent growth
trend won't work beyond, say, the end of 1996.
Maturity is indeed going to start setting in
sometime over the next year (unless KE pulls
another rabbit out of his R&D hat, which isn't
likely, but isn't impossible either).
Still, you think that, because of the appearance
(finally) of the JAZ, my simplistic Q2 exponential
projection of $343 million is too low. I'm
not so sure of that. Let's take the analogy
to the same phase of the Zip's introduction.
In 1995, IOMG went from Q1 revenues of $40 million
to Q2 revenues of $53 million. At least part
of that $13 million jump was the Ditto, not
the Zip. For the sake of argument, let's say
the Zip contributed half, or $6.5 million. The
jump from 95Q2 to 95Q3 was $32 million, again
with a little bit of that being the Ditto, not
the Zip. Again for the sake of argument, let's
say the Zip accounted for $25 million of that.
(I'm pulling my percentages out of a hat, just
to get some kind of ballpark purchase on IOMG's
revenue gains during a ramp-up.) During these
quarters, the Zip was out there all right, but
you couldn't get one for love or money, which
is about the situation with the JAZ now. Also,
the Zip at that time was already being touted
by folks like Jim Seymour as the Greatest Thing
Since Sliced Bread, whereas at this moment people
are being positive about the JAZ but aren't
saying it's hot with a capital "H" followed
by ten exclamation marks. Accordingly, the
situation is roughly the same for Zip then
and JAZ now, maybe with the JAZ now being
a little less frenzied than the Zip then.
Because of these considerations, if the analogy
holds, we can expect the JAZ to contribute only
on the order of $10 million to 96Q2, and my
gut guess is that even that is high. If indeed
the JAZzes start arriving in big crates at the
major distributors and continue flying out the
door (as they're doing now), then we can expect
the JAZ to contribute significantly, perhaps,
to the 96Q3 revenues. I'm not expecting much
for Q2 from that product, though. If the initial
verdict from first users is positive, however,
then I expect the JAZ to catch on very, very
quickly as the backup device of choice. Streaming
tape is clunky at best for that purpose, and
CD-R is too expensive and leaves you with a pile
of obsolete, unerasable backup CDs to use in
office frisbee games. The Zip is okay for backup,
but not as convenient as the JAZ promises to be,
though the budget-conscious will put up with the
incovenience to avoid the C-note-per-cartridge
cost of the JAZ arrangement. So, if the early
experimentation with the JAZ in the field yields
positive news, we can expect bigtime JAZ revenues
for backup purposes in the latter part of 1996
and beyond. But not during Q2, I don't think.
It's too early in the ramp-up. Pity, that.
Of course, since I'm currently into IOMG at an
average price for all my shares in the low 40s,
I'd be happy to be proven wrong by your optimism.
I'll settle, though, for my current anticipation,
namely, a slow gain to somewhere between $60 and
$100 by mid-1997. Unless another miracle happens,
the days of 300% a year momentum are most surely
over, but another doubling of value (or even
two if JAZ works out really great) isn't out
of the question. Wouldn't it be nice if this
happened, but that, along the way, because
of the destabilizing effects of the big-block
speculative traders, the price varied widely as
it inched up over time? That way people like
you and Mary and me would make our gains, and
deserving, cautious(?), and constructively deliberative
shorters like Joe Rizzo might get to cover their
shorts and pocket a little cash, too. Everybody
wins (except, of course, for anybody ignorant
enough to think that Syquest is going to drive
the Zip out and cause the IOMG "momentum bubble"
to burst, pushing the share price down to ten
bucks, haha).
Cheers, Tom |
