RE: Jaz vs. SyJet Sales? [ Jaz 80% of Hi-End Market? ]
>> A SYQT buyout from IOM? Judging from threads and IOM's failure <<
>> on the Jazz product, a buyout would not surprise me. IOM has 200X <<
>> the distribution channels and marketing might of Syquest. With <<
>> storage requirements accelerating, people need GB+ removeable <<
>> products. If Jazz aint happening, then a purchase of Syquest may be <<
>> a great strategic move. <<
Both here and on the Iomega threads, there are occassional implications that SyJet is clobbering Jaz in the marketplace. I'm not sure if you're implying this here or not, so this is really just a general comment, not necessarily directed towards you. If we look at the numbers, I think it'll be clear to everyone that Jaz commands a very large lead in the high-end removable marketplace.
First, let's crunch some data to see how many Jaz drives Iomega is selling. On 7/17/97, Iomega announced that it had surpassed 1 million Jaz drives sold, a mere 20 months after it's introduction. That's an average of 50,000 per month. Since revenues have doubled over that time period, I'll assume that in recent months it's closer to 67,000 per month and that in early months it was closer to 33,000 per month. That would be approximately 200,000 Jaz drives per quarter in recent quarters.
Next, let's crunch some data to see how many SyJets are being sold. SyQuest gives milestone number of drive and cartridge sales at the bottom of most of their press releases. This data has been fairly useless, though, since the milestone for drives hasn't changed recently. The most accurate way to calculate SyJet unit sales will be to deduce them from actual sales dollars. SyJet was shipped in February, 1997, with a supposed $26 million backlog in sales. TOTAL company sales for the first six months of the year were only $48.5 million. Historically, about half of their revenue has been from cartridges and half from drives. This gives about $25 million for drives in six months. Even if 80% of their sales in SyJet, that's only $20 million or about 100,000 drives. That's a quarterly rate of 50,000 drives MAX, which is about 1/4 of the Jaz sales rate.
If Iomega is selling 200,000 Jaz drives per quarter and SyQuest is selling 50,000 SyJet's per quarter, Iomega has 80% of the high-end market.
Even more importantly is the recent price reduction on Jaz and the new push in the marketplace. Iomega is aggressively increasing its market share by reaching out to bring new customers into the market, not by stealing SyQuest customers. If you look over SyQuest's sales over the past three years or so, they've been fairly steady. Up some quarters and down others, but certainly no steady increase or decline. If you look at either Iomega or SyQuest more than two or three years ago, you'll see the same thing--a fairly steady sales line. Iomega in the past two years has increased their sales about ten-fold, however. This is a from a totally new market.
SyQuest certainly has the opportunity to do the same, but there will be many hurdles for them. Iomega made the incredible growth look easy, but from someone who has been in a fast-growing company (although nowhere near Iomega's growth rate or size), trust me--it's anything but easy. Cash flow is a major constraint that SyQuest is struggling with even without the growth.
I certainly welcome any criticism of my calculations, deductions, and observations.
For the record, I hold no position in SYQT and am long on IOM. I am very bearish on SYQT, primarily due to dilution, competition, and cash flow.
- Michael Coley
- i1.net |
