You guys are missing my point here. I never said that people only buy
the cheapest computers. BUT, much of the volume is in these low to
mid range PCs (below $1700). There is still volume above the $2000
price point, but it drops off VERY rapidly.
Anyway, there are 3 markets out there:
(1) The mass, consumer marketplace (low end PCs, nintendoes, VCRs, etc.)
(2) midrange consumer (most of us here)
(3) high end, business use.
My contention is that ZIP (or Jaz) must penetrate all these marketplaces
to become the 'standard', otherwise, they are just 'fads', to be replaced
by the next best device.
Visiting each in turn....
(1) to penetrate this market, the ZIP must cost less then the floppy
drive, or it has little to no chance here. Margins are razor thin
in this market.
(2) Zip probably already is the standard here..
(3) HIGH END - This is the big question in my mind.. This is the story
I'm trying to piece together. From what I've seen in my travels,
corporate America does NOT need these devices. They are not
'must haves'. Professionals are getting along just fine with networks,
FTP, telnet, etc.. for transferring files, loading SW, and backups.
Allen, however, did bring up an interesting point about telecommuting,
I need to evaluate this one for awhile. The number one computer in
this marketplace is Compaq. Therefore, I believe that the LS-120 has
as much of a chance as the ZIP in this market. Gateway is another..
no commitment from them either. (They're smart! let people buy these
devices as add-ons.. save the factory cost!)
To sum this up:
Current status Quo (market 2) is resulting in declining revenues, margin
pressures, and 'fad factor' winding down.. So, Iomega needs to penetrate
markets (1) & (3). (1) = death of earnings and margins. (3) = fight against
LS-120, DVD, networks, docking stations, etc..
I'm keeping an eye out.. If I see significant progress being made in
these areas, BOOM, I'm back in.. I'd just hate to give back my substantial
gains I pocketed from this stock until I'm sure...
kp |
