Hi Trakker!
On your 2 rebuttles:
(1) In order for Zip to be a 'standard' it has to be in all
machines, from low to high end. The low end (which encompasses
the $2000 sweet spot you mentioned) is about $2000 and lower.
This is where most volume is and where the Zip must be. Now, you
yourself said that the consumer likes to spend about $2000 on
a new PC. Therefore, manufactures MUST price their machines at
this level or below or they'll lose market share. (Have to price
at the sweet spot.) Now, let's do a little analysis:
How much do you think a manufacture makes per PC manufactured? You'd
be suprised at the real number. It isn't that much. Let's use
10% (this number is close enough for this analysis) so... 10% of
2000 = $200 profit/system. Now, let's raise the base factory cost
of the system by removing a floppy & replacing it with a Zip drive.
Floppy = $18 wholesale... Zip = ~$70. 70-18 = $52.. So, now instead
of making $200 profit per system, it's now only $148 per system.
(decrease of 25%!!) Millions of dollars are left on the table.
So.. How can the Zip become standard:
- Become as cheap as a floppy (killing Iomega margins).
- Customer demand FORCES it to be a standard feature, making
manufactures eat the added cost. <- only happens with processors
But, the customer can just go out and buy a Zip him/herself
if needed. Notice how this is true in most cases. The $2000 PC
is usually 2 generations behind in CD-ROMS, graphics, disks,
modem, memory, etc.. Why not mass storage? Let the customer
foot the bill for these high-end features.
- Remember, to replace a feature, you must be cheaper or as
cheap as that feature you are replacing (look at 4x CD-ROMS, the
factory costs for these finally equal 2x CDROMs, hence the
changeover)
Point (2) What I stated was that Iomega is not making money on the drives
they are selling to OEMs!!! (not customers, those they make
money on)
Anyway, always nice debating with you Trakker!
Have fun,
kp
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