Ref:"Iomega doubling is reasonable within a year; 10x doesn't seem doable.
Optimistic scenario - 4th Q 1996 - PC makers who have announced inclusion of
ZIP on at least some models (IBM, Gateway, Packard Bell, etc) represent
order of 50% of total market. If ZIP is a successful product, its reasonable
it will be sold at 1/4 to 1/3 penetration of those offering = ~ 50% x 30% = ~15%
of PC market volume. Don't know exact current number, but range of 50 to
100 MM PC's per year is probably correct & 30% of 50% x 75MM = 11 MM
ZIP drives/ year RATE."
George,
I believe your estimates are extremely low and left out many key areas.
A few key points:
1. There is no question that the 1.44FD is obsolete and is currently useless
to the majority of PC users. People who thinks otherwise aren't real PC users
or really need a PC in the first place. The PC market is driven by real needs
for improved work productivity and efficiency. The 1.44FD is a real drag and
PC users just can't wait for something better to come along. That why the Zip
was such an instant and huge hit with consumers. There will be a new
standard to replace the 1.44FD, period.
The only real question is which technology will emerge as the new standard,
Zip, EZ135, EZFlyer, LS120? Most non-techie financial media folks and analysts
are still unsure and confused and try to make an issue of it, but there is no
question among most PC makers, OEMs, and PC experts that the Zip has
already won this race. At the series of major OEM announcements in last
2 weeks, I no longer have any doubt that the Zip is the next floppy standard.
2. Data Quest estimates Laptop/Notebook sales in 1996 will be 12.6 mils
units. I do not have a quoted number for 1996 est. worldwide shipment of
desktop PC, but I believe it is around 50-75 mils and growing about 20% a year.
If the Zip becomes a standard, essentially every computer shipped in 1998-1999
will have a Zip in it. That is the whole idea of becoming a standard, like CDROM
and the now obsolete 1.44FD.
3. Acer chairman said a few days ago that they Acer estimates sale of AcerBasic
in Asia alone will total 200 mils units in the next few years (3-4 years if I remember
correctly). Every AcerBasic has a Zip in it. If Acer is correct, Zip drive sale alone
from AcerBasic will be 30-50 millions units a year. Acer alone should be
able to top your estimate of 11 mils drives/year.
Adding sale of similar network computers in the US, like the Pippin @World solution
line. I have very little doubt that Internet Box designers will now include the Zip at
least as an option, because of AcerBasic and Pippin @World. They have no choice.
4. Zip tie ratio will be at least 10. Most likely around 20-30 lifetime.
Although current demands for Zip drives and disks currently comes from home PC
users and creative professionals. I believe huge future demands for Zip drives
and disks will come from industries and government - where huge amount of data
are being kept on a daily basis. These folks haven't yet to discover the usefulness,
convenience, and time-saving features of the Zip. These folks aften are behind
the public, but once they catch on, they can drive huge demands.
Tie ratio of 10,20, or 30 does not assume that Zip disks will be used
as a distribution media. But I just can't see how the Zip can be become
a standard, and yet there will be no software distribution on Zip disks.
If Zip disks has a significant slice of the software distribution part, tie
ratios of 10,20, 30 would be extremely too low.
If Acer and Bandai were to try to compete in the TV-arcade games now
dominated by Nintendo, Genesis, Sony, etc. Zip disk sales and tie ratios
for the AcerBasic and @World units will be huge.
5. Once the Zip becomes an undisputed standard, profit margin will be
great, even for $99 Zip drive and $5 Zip disks. Production/parts/overhead
and marketing costs as a percentage always drop drastically with greatly
increased production volume. At least 12-15% net margin is my guess.
6. Products currently in the pipeline will further keep revenue and profit
margin up, and potential competitors away, i.e. 200MB, 400MB Zip, and 4Gig Jaz.
7. Jaz. Don't forget about Jaz. Could be bigger than the Zip itself.
The harddrive business will never be the same with the Jaz around.
Power PC users are actually much more excited about the Jaz than the
Zip. The Video/Audio market (via Sony) and creative/digital design
markets are no chicken feed. The Jaz is alone in its spot as top dog in
the harddisk removable drives category. This is widely recognized by
all in the industry. There is no competition that comes close to
price/performance in all publicized tests and side-by-side evaluations.
There is a screaming needs for removable storage media like Zip and
Jaz in the industries, where PCs have become more and more a part
of process control, data recording/storage. I wouldn't be surprised if the
Zip and Jaz are are huge hit with the industrial PCs in next 2-3 years.
My estimate of 1998 revenues was 6-8 bils with a 12-15% net margin,
but that was before Acer and Pippin @world. I am thinking of a much
bigger number now.
One of my biggest concern was IOMG 's ability to ramp up capacity to
meet OEM demands when the Zip becomes standard in all PC. We are
talking 30-50 mils units a year and possibly a lot more here. I didn't think
that IOMG can ramp up to more than 8 bils revenue in 1998. Apparently,
the OEMs have the same concerns.
However, at the NY PC expo, KE indicated that announcements are forth
coming that will eliminate any concerns/doubts in the OEMs 's mind on this
issue. Apparently, deals with one or more big manufacturers have been
made, since IOMG and Epson could not possibly ramp up and supply
30-50 mils Zips a year by 1998 or so.
Still quite a few "ifs" here, but just want to show that your "Optimistic
Scenario" is quite pessimistic. IOMG basically must fail completely
in their quest to do just 11 mils. drives/year.
Young |
