IOMG in Germany
1) STORE CHECKS: In March, when I became a IOMG stockholder, ZIP drives and disks were practically unavailable here in Berlin. Since early June, there is ample supply everywhere. After the pent-up demand had been satisfied, demand was falling off pretty quickly. Retail prices for the drives have dropped about 15% since March. One retailer told me that people are waiting for the LS-120. As far as Jaz is concerned, it is readily available since the end of June and now in ample supply. According to the same person mentioned above 'it's too expensive' and not moving very fast. I don't know what Kim Edwards meant when he talked about distribution problems in Europe. I would have understood that for the 1st quarter, but for the second? The products are in the stores and highly visible, but demand is seemingly slackening. People who have bought an Iomega product love it, but not so many people seem to have a need for this kind of devices.
2) PARIS: In mid-June I did a store check in Paris (at FNAC; a major computer retailer). There was an abundance of Zip drives and disks. No sign of problems of getting the products to the customers. More signs of reluctance of customers ...
3) REBATE: The Zip rebate will have no effect in Germany and many other European countries, because manufacturer rebates are uncommon as well as illegal here (I'm not sure about the UK). The implications are two-fold: there will be no additional volume generated by a drop in price in the 3rd quarter while at the same time the units that are sold will bring in full price. If that is true for most countries outside the US and if one assumes that about 40-50% of IOMG's revenues stem from exports then only about 60% of the Zip retail sales will be
possibly affected by the $50 discount.
4) OEM DEAL ABOUT TO TANK: Among the OEM deals announced by IOMG was one which had specific importance for Germany and maybe for some other European countries. The company is called ESCOM and (I think) is number 3 in Germany in number of PC units sold. Unfortunately, it just filed for bankruptcy.
5) HUMAN RESOURCES: About a month ago IOMG had put out a wanted ad here in Germany for 'European Marketing Professionals' (Product Manager, Market Manager, and Market Communications Specialist) for their total product line. This tells me that they had not had any (or much of a) local marketing presence here before, which, in turn, could partly explain the lackluster performance in this part of the world.
6) FIRST LS-120 SIGHTINGS: Yesterday I browsed a trade journal for computer retailers and found the first ad by a distributor which included the LS-120. It was priced at DM 430 or US$ 290 (before tax and to retailers). The media cost the equivalent of $26. Comparable prices for the IOMG products: $180 and $16, respectively. It is unclear whether they could really deliver an LS-120 at this point in time. To put things in perspective: they were the only ones in this
catalog of distributors featuring the LS-120 (no brand name was given!); everyone else offered Zip and Jaz.
7) LS-120 PRODUCT OF THE YEAR: LS-120 has received the product-of-the-year award at CEBIT, the most important (and most influential) computer fair in Europe in March 1996.
All in all, I am not too optimistic that European sales will help 3rd quarter results much. July and August are traditionally very slow. European sales in quarter two were $56m. Would be surprised if they came in only at $40m in the third. Fourth quarter could be real strong unless LS-120 is around by then.
My research is by no means representative. Hope it still helps some people. |
