Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: Archie R. Wortham who wrote (7025)	9/11/1996 12:03:00 AM
From: Sturgeon	of 58324

Re: Matsushita deal. The analogy that has been used to describe Iomega's business model is that of razors and blades. Sell the razors at a loss and make money off the blades. This business model is inevitable in industries where subsequent sales (disks) depend on the initial sale (drives). The same model exists in the video game industry because it operates on a software standard. Sega, Nintendo, and Sony all sell their machines at a loss and hope to make it up selling games. What puzzles me about this deal is that Matsushita is making the drives not the disks. They are taking the part of the deal that makes little or no money. Obviously they don't intend to lose money so they will make sure they sell the drives at a good profit. How does this affect Iomega's ability to follow the razor/blades model? If Iomega sells drives at a loss (something competition may force them to do) what will Matsushita do? It seems extremely unlikely that Matsushita is paying much to Iomega for the licensing agreement because of the limited profit potential in drives (as opposed to disks).

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