Gary,
Without being relfexive it is more important to recognize who owns SAE. Over the last few weeks many particants on the board have been contemplating how a cash strapped company like Syquest could get its hands on Magneto Resistive technology. Syquest must be using Magneto Resistive recording heads in SparQ. The SparQ drive possesses an unbelievable combination of storage size and price. Current perception is that Syquest is not making any money on the drives. This may not
necessarily be true. With MR and other advanced recording technologies lower costs dramatically. This is why Read Rite, Seagate and others are throwing all their financial might into ramping up the migration path to these technologies.
If TDK is supplying advanced MR heads to Syquest and simultaneously purchasing shares this bodes ill for IOM.
Remember, TDK is the only large media manufacturer next to Imation that does not have a IOM Zip liscence hence they might be feeling left out of the party (Maxell, Fuji, Sony) $33 for a 1GB is hard to pass up at retail.
It might be time for the participants to check the feedback mechanism.
1. Notebook Drives,
My question to the board. First, why don't we hear about them more. This is a tremendous market yet IOM doesn't seem to be throwing a whold lot of weight behind it. Were's the Notebook marketing blitz that IOM should be trailblazing on. I feel that it will be a critical mistake for Iomega to leave sales, distribution and marketing up to CNF and VST. Not taking anything away from these two companies, but they lack the size{cash flow},marketing muscle, and the brand recognition that the notebook drives need to gain support among OEM's, Corporate and retail buyers.
Speaking of retail buyers, when will these drives be made available at retail. CNF and VST will make a whole lot of money keeping these drives out of other distribution channels, but it means disaster for Iomega shareholders. IOM needs to get these drives completely in house to monitor quallity and production. IOM also needs to either buy or build the capacity to manufacture the notebook drives in mass quantites. It might also be logical for IOM to purchase CNF,VST or both.
Also, still no concrete news on the 12.7mm drives. Last the participants heard IOM was working the motors size to fit properly in the drive. IOM hasn't clearified its progress on this task. Shareholders need to hear how development is progressing on a timely basis.
2. Buzz and Jaz2. Shown off at MacWorld. But when are they going to give Best Buy the show. Both products out of development but are being tweaked. As shareholders we can live with that. High quality is important. IOM needs to get these products out in 1Q as promised. Any delay would seriously call into question IOM's manufacturing and RD capabilites. {Since notebooks still aren't off the grown completely}.
3. Zip. Currently at 7% inclusion rate at Retail. We all know this one. The price needs to come down, down, down for OEM's. Econmies of scale, learning curve and the Malysian Ringgit are helping. Apple announcing standardization would have boosted perception of Zip. Apple needs cash, IOM should offer Apple rebates on each Zip included in a box if necessary. Apple still commands about 5% market share in the pc industry, and it has stabilized for now. Dell seems to be on the verge of making a bigger commitment, IOM needs to solidify and press harder for bigger inclusion rate. HP, IBM and Packard Bell seem to have backed away from Zip. IBM's peronal computer division is brain dead, they wish PC's would just go away. HP and Packard Bell need to be courted in a big way. It was Packard Bell who was one of the first to include Zip, but they now have lost touch with TechX.
Probably the reason why I would never buy a Packard T I mean Bell.
Most participants on the board perceive that Sony won't rip out the Zip for the HiFD when available. Yet, I can totally see them doing this. It's simply Japanese. Just ask Sakibara.
4.Clik! I have seen the drive in action. Contrary to most publications I do see a potentially big market for the drive. More of a mini-Zip than n.hand but hey its grandfather has sold 12 million. Most bias observers think Clik! has to be installed internally in all products across all markets to be successful. This is nano think. The Zip basically has one destination, the PC. Clik! has potentially many destinations and only would need one or two commitments from OEM's across different vertical or horizontal markets. A Nokia out of left field maybe a Telxon out of right. Also, the Clik! could have medical, criminal records and smart card like tendencies as well.
5. Getting back to the shadow, I was told that over the last 12 months Syquest has received $175 million in venture capital through private placements most in paper or converted paper. Yes, dilution but that's not my point. My point is that rightly or wrongly their are participants who feel that Iomega's wealth generation can be duplicated and are throwing a lot money at the idea. Don't count Syquest out especially when MR technology is being given to them in exchange for cheap paper.
6. Iomega needs to rethink their strategy on this one. Monday morning they need to lay it on the line for Read Rite, Komag, HMT, Hutch, even Seagate or Quantum, The first one to be able to supply IOM with MR heads in quantity gets the business for future products IOM incorporates with the technology. *This is that serious* IOM falls behind on this one and other companies could be selling 2GB removables for $99. If you don't think Consumers are price conscious just look at Zip.
7. Why do I still see External Zips for $120-140. Prices may be a little stickier than I would have liked.
8. Last but not least, participants should not fall asleep on the Nomai issue. Were do we stand currently on this situation. You snooze you lose. Again, most bias participants have painted a perception that all confrontaions with Iomega will be won on Nomai's part. That is the type of group think we have currently. If this is so. I am willing to bet that Nomai loses sooner or later. Hopefully its a $100 million dollar punitive damage.
Steve
|
