Before dancing on SyQuest's grave, consider this:
*******************************************************************************
DOJ Investigates Roy UT Firm
November 20, 1997
by Dean Moriarty
Washington Post Staff Writer
In its ongoing assault on market hegemony of high technology firms, the Department of Justice announced today that it was launching an antitrust investigation against the Iomega Corporation. The company, headquartered in Roy, UT, is the leading manufacturer and marketer of removable data storage, commonly called zip drives, for personal computers. According to some industry sources, Iomega controls as much as 85% of this rapidy growing business.
"Just as with Microsoft and Intel," stated R. Patrick McMurphy, assistant attorney general for antitrust affairs within the Department, "Iomega seems bent on completely dominating the marketplace. We find it highly suspicious that a company on the verge of bankrupcy just a couple years ago has managed to generate almost 2 billion dollars a year in sales. You'd have to be crazy to think that was possible without engaging in anti-competitive practices."
Industry analysts do not expect this to be a serious problem for the corporation, though it could have short term implications. Jack Duluoz, chief technology analyst for the Satori Research Associates of Cody, CA stated "While it does seem strange that Iomega has grown as they have, it hasn't been due to a lack of competition. Several other companies have introduced removable storage devices but none seem to have caught on, even though they were viewed as technologically superior to the Zip drive. I wouldn't be surprised to see Iomega cut some kind of deal with a competitor, like the SyQuest Corporation, just to make it appear that there is more than one company out there. SyQuest has a good product, but they have a horrendous balance sheet while Iomega has some 200 million dollars in the bank."
The Justice Department action has been supported by some industry groups. "We're sick of seeing Iomega and their cohorts in the retail and pc industry forcing their crummy drives down the throats of consumers who don't realize what an inferior product they're buying," commented R. Read, executive director of the National Association of Sound Engineers.
Iomega declined to comment on this action, but a source close to the company said that at worst it was just a minor irritation and that Wall Street would view it the same way.
********************************************************************************
All in jest, of course, but I'm sure no one believed it for a moment. |
