Fred,
First of all, I have no position in Iomega.
To address your comments: When DVD (-RAM) finally does ship, I think it will pose a great threat, not only to Jazz, but Zip as well.
I don't think access times will be a problem at all. Sure, first generation DVDs have relatively slow access times, but there is plenty of room for improvement. CD-ROMs effectively started at 1x, and now they're up to 24x (yes, I know that doesn't mean seek times, but you get the point).
Also, DVD is a standard, and hence, a commodity item. That being said, it's only a matter of time before they come dirt-cheap; much less than $99 dollars (take CD-ROM price erosion, for example). Iomega's drives, while de-facto standards, are still proprietary. I'm sure Iomega will lower prices, significantly, but DVD will eventually be much cheaper.
DVD (they say) will also be as easy to use as a CD or floppy disk, and will surely come standard with every (even low-end) PC. Iomega drives probably won't. Another issue here, is that software will eventually come on DVD disks, and I think it's safe to say that we won't be purchasing much software which comes on a Zip cartrage.
Another thing, DVD disks will be cheap--just a few cents. Zip/Jazz cartrages are relatively expensive (isn't that what some perceive as IOM's business model--make money on the cartrages (like Gillette's famous strategy).
DVD's capacity is also much greater. Try 30 MB per disk (15 on each side). Refer to news.com .
To conclude, I think that DVD has the potential to destroy IOM's core business. But it won't be this year or next (I'm assuming DVD gains critical mass in 1999). So Iomega may be OK for now, but I'm curious as to why a long term investor such as yourself regards it so highly.
My read on the current market: I have none. I'm done very little trading since the Intel preannouncement--I've never felt so confused before. That Friday, the market opened down 47, and closed flat. I did absolutely nothing; just sat there in awe. My dad and broker kept calling, begging me to buy stuff. I refused, and kept saying things like, "this is 'wrong', it shouldn't be this way. The market has to go down. It HAS to. This just isn't right...." I also figured that the market would take a big hit that following Monday, as investors regained their irrationally exhuberant senses. Didn't happen, and I started to feel as though I was the one who was wrong. I then came up with the idea that the market would erode over the next week or two, at least. But I still was very confused, so I didn't really act on anything (as in, didn't sell), just watched. And here we are....
So anyway, I had a flash-back of something very disturbing the other day. Keep in mind, that I was new to the market starting in July 1995, and I learned A LOT during that time. I haven't really resolved anything in my mind, yet, but it's something I thinking/worrying about:
Think back to July 1995....Intel missed earnings, and the stock went down sharply, and kept eroding. Meanwhile, the market (NASDAQ) kept going up, a lot, for another three months (until mid-September). Then, the big tech fall came, thanks to the semiconductors.
I'm very uncertain of what's going to happen in the market these days, but I'm extremely concerned that there's more to this Intel warning than anyone knows. So far, companies like Dell and Compaq say things are great. What will they be saying in a couple of months? I'm not sure, but Intel is a bellwheter, it *HAS* to be a proxy for the industry, doesn't it? And as 1995 showed, Intel has been a leading indicator in the past; so does that mean it's only a matter of time...?????
Those are the questions/issues I'm wrestling with.
Sal |
