duly noted Francis. I'll try to live up to your expectations. thanks for the swipe. let me see if i can gain some of your respect. here's my informed opinion. what makes me informed? maybe the years that I've worked on building storage brands, or launching new storage brands that have captured the desires of consumers <G>.
my opinion on why Iomega is a long term and consistent win:
1. Management:
Iomega's management team consists of executives recruited from F1000 packaged goods, consumer electronics, and high technology companies that all bring to the table understanding and experience of producing and marketing consummable products, in this case consummable space. They've come from Polaroid (Tim Hill), General Electric (KE), Canon, IBM, H-P, Cheyenne Software, Apple Computer, Ingram, Sony, Gates-Millenium, and Dell amongst many others.
This team was able to unleash a new and improved brand on the market that completely stunned and wiped out any formidable competition. They realized through thousands of interviews and scores of focus groups, that the computer was crossing the chasm to a new consumer who didn't care about "speeds and feeds". They built a product to match the needs of the consumer, they forged working relationships with key retailers, and aggressively pursued OEM agreements that came to fruition in a timeframe that no one in their right mind would have conceived possible.
All of this coming from a company that prior to the arrival of this management team had produced a one-trick pony in the Bernoulli Box, a nice tape product that they had branded as Iomega Tape 250, a floptical product (now currently the LS-120), and an M/O device called LaserSafe that they applied the Bernoulli pricing model to. All of this combined provided Iomega flat growth and brought them to the brink of bankruptcy.
Since their arrival they've launched an extremely successful low end personal solution that knocked the socks off the industry, a high end solution that still holds promise as the ultimate hard drive replacement, and a repackaged product in Ditto that quickly stole market share from CMS and Conner to become one of the leading tape brands worldwide. They've proposed interesting technology with n.hand that if it becomes real could make zip look tiny.
2. Zip Drive:
The Marketplace:
According to Dataquest, forecasted annual shipments of PCs will be above 100 million by 1999. The average hard drive will have grown from 760MB in 1995 to over 4GB by 1999
Consumer and market trends like the "information superhighway" (ie on-line services, internet use, file and application downloads), consumer multimedia use: a/v and images, explosion of home computer, SOHO, TOHO and telecommuting markets have brought introduced multiple users/usages and multiple computers to each home and small office, application sizes and subsequently file sizes are becoming exponentially storage intensive, personal electronic filing (human trait of never throwing anything away), and the explosion of mobile computing.
Evolution of Computer Related Technologies
Since 1982 we have seen the following:
Modems go from 300bps to today 56k
CPU ram grow from 64kb to 32MB
CPU Processor blazing at 8088 to today's Pentium II
Tape drives (QIC/DC2000 category) frow from 60MB to 3.2GB
Printers 8-pin dot matrix to personal, low cost color lasers
Hard drives average size increase from 10MB to 2.5GB
Floppy drives 3 1/2" 1.2MB to .....
Need exists for a product to replace the outdated floppy. This new product must be able to withstand the demands outlined in the consumer and market trends.
Defining a Standard
Become a standard involves traveling a pretty standard path; one that involves becoming a standard in the aftermarket and OEM market.
Step One:
Niche Product defined by medium profit, low revenue and a 2-3 year lifecycle. In this lifecylce the product must cross the chasm to move on. Chasm crossing is intense. First you need to capture the minds of innovators/enthusiasts who will buy cool gadgets regardless of price as long as they have a unique solution. Next step on the curve is the early adopter who is informed and doesn't really care about the opinions of the innovator, they are looking for unique solutions that solve their unique problems. Next step is the early majority. This is where the chasm starts to come in. These people buy on functional value - ie Three Drives in One. Iomega went after and captured this audience almost immediately when they launched Zip in March of 1995.
Iomega has moved beyond this step to become an Aftermarket standard:
This is defined by high profit (evidenced by profit growth), medium revenue and a 5-7 year life cycle. Zip has no competition in the aftermarket. They own the shelves and the presence in the storefronts worldwide. You can't build this overnight, which is why Syquest, Swan, Avatar, and the LS-120 consortium will never mount a legitimate threat in this space.
They may in time erode market share, but that will be determined by the next step along the path: OEM Standard
This is defined by low profit (give away the drives), high revenue and an 8-15 year life cycle. Iomega has established manufacturing relationships and OEM relationships with THE players. A 100% increase in growth from Q4, 96 to Q1 97 leads me to the opinion that IOM is well along this path. A decrease in the revenue from the drives and an overall increase in profit margins lends evidence to the low profit from drives high profit from disks; ie razor/blade model.
Finally the last step is becoming a defacto standard. defined by medium to high profit, huge revenue, and an 8-15 year life cycle.
This will only come together if the first three steps are achieved. The only storage products to date that have achieved this is Hard drives, floppy drives (FDD) and CD-ROMs. Currently FDD and CD-ROMs are under attack by new technologies Zip and DVD. These two will work together not compete.
This leads me to why Iomega shouldn't be lumped into the disk drive sector. If you understand the costs of media manufacturing and the high profit that is obtainable from producing and establishing a standard then you would have to figure in a consummable media equation to their valuatin in this sector - which I've yet to see.
Competition
Zip has been in the market for over 2 years. 2 years to establish market share without competition. To date there is no formidable competition in the marketplace that should concern Iomega.
3. Ditto
ZDNet did a survey that asked if the respondent had experienced a hard disk crash - the result is over 52% had lost some or all of their data.
No tape manufacturer has ever figured out how to capture the minds of consumers with a tape drive until Iomega positioned Ditto as "Insurance for your Stuff". People understood what this meant. Iomega produced a product with unique features; beltless designs for reliability and 1-step backup that backed up your data while you continued to work, they leveraged relationships built with Zip to capture retail space, and they blew out an advertising campaign that included TV (for a tape product that's unheard of). All of which led Iomega to the number one share player in Europe and potentially the number one player in the US when new data is released in the coming months.
4. Jaz Drive
The darkhorse of the group. Jaz answered the question posed by MacWeek in 1995; Where's the next evolution to high performance, high capacity, low cost removable storage. At the time SyQuest had the 270MB product and hadn't really advanced the capacity since they had won the battle with Bernoulli.
Jaz was launched through stealth marketing. Iomega captured the innovators and early adopters before the market had really ever heard of Jaz. While Zip and Jaz were developed simultaneously Iomega realized that Jaz success relied on Zip success to fund the development. Iomega executed on Zip success and IMO we will see the Jaz become a highly successful product within the year.
These are just all my informed opinions gathered through years of working in high technology and researching and analyzing consumer thoughts. I could go on more about Ditto and Jaz, but Zip is the cool product that will determine the fate of Iomega.
Sorry that I haven't brought much to the discussion, but what has there been to discuss?
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