Dr. IOMEGA. Please address the SparQ issue. If left unchallenged, SparQ could do some damage to IOM.
The way I see it there are a few possibilities.
1) Hang tough, and SYQT declares bankruptcy next year.
The problem with that is, it is far from certain. And besides, ORB and others are on deck.
2) Hang tough and SYQT survives, though doesn't thrive.
The problem here is SparQ could severely damage both Jaz and Jaz-2 sales.
3) IOM exits the high-end market.
This would, of course, be a PR disaster, though I could fully understand it if they did. The whole high-end fixed disk biz seems doomed right now. And the high-end removable biz is beginning to look competitive too, and Jaz doesn't have Zip's enormous lead in it's market segment.
4) IOM matches SparQ's price: $200 for Jaz-1 and $30 per Jaz-1 cart.
The problem here is it makes Jaz-2 seriously overpriced. So assuming Jaz-2 is re-priced accordingly, what happens to Jaz margins? Overall margins?
Understand I am still bullish on IOM. But this issue must be faced head-on. I didn't buy IOM for Jaz, but it if Jaz stumbles, I have no doubt it would hurt the stock price. Having just taken a beating in the fixed-disk price wars/dumping fiasco, I am not looking forward to a repeat in removables. But I don't see how it can be avoided and keep the Jaz line viable. |
