Duncan, here's the plan:
In addition to Iomega not making that huge of a margin on the drives, they also sell disproportionally few, as compared to the sale of the disks. THE DRIVE SALES DON'T MATTER. The drive is an advertisement for the disks, although they happen to make some money on the drives.
As they increase production, which they have FINALLY caught up with demand, they need to find ways of getting even more volume. This is not a sign of sales backing off, this is a sign of desired growth.
The standardization idea is VERY important, and this is part of what is required to get it done. They need to blow the competition (which there isn't really any) or the threat of competition out of the water. I have talked to some salespeople at computer stores, and although the drives are not clearing the shelves, they are still selling better than ever before, and the disks ARE clearing the shelves.
People will buy lots of disks, and think they have enough. They will NEVER have enough.
Their focus, as it should be, is in the tie, and the tie growth.
Iomega needs to drop prices on the zip, at market (as opposed to just a rebate), and they need to release the 200MB zip ASAP. Then they need to wait until their production is high enough that they can easily meet demand. Then they need to do it again. A strategy similar to Intel's. |
