NEWS: Another price cut is here, finally :-)
Iomega banks on new Zip drive
By Stephanie Miles
Staff Writer, CNET NEWS.COM
April 17, 1998, 1:00 p.m. PT
Iomega will announce a new low-price storage drive Monday for the retail market, hoping to capitalize on the low-cost PC craze and move past recent setbacks involving some of its older products.
The Zip Internal ATAPI, to be released later this month, will enable lower-end
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PCs to incorporate the 100MB internal Zip drive that was previously only available with a pricier interface technology. The drive will be offered for $99.95.
The company's Zip drives came under fire earlier this year when users claimed serious malfunctions in their drives and disks in a problem that has come to be known as the "click of death," as first reported by CNET's NEWS.COM.
Iomega is also looking for a way to turn around its first-quarter earnings, which it reported today at $18.6 million in the red. The new ATAPI drive is seen as an attempt to increase sales in the retail sector, which have higher margins than sales to PC manufacturers.
Inexpensive ATAPI-based PCs allow users to mix and match different drives. The SCSI interface is faster but found on pricier systems.
"In the past, they've had this drive available for SCSI-based machines," said Paul Giles, assistant manager for Iomega products at Insight, a PC and peripherals retailer. "But this interface is what most home users use. Iomega expects this to be a very popular product."
Iomega's move into the sub-$1,000 PC market marks something of a departure from the storage drive maker's nearly ubiquitous presence in the higher-end PC market. The company estimates over 12 million Zip drives have been sold since the product was released in 1995. At the same time, it's in tune with the surging popularity of sub-$1,000 systems, which comprise as much as 40 percent of the PC market.
"Today's consumer is a cost-conscious consumer," said Ted Pine, a storage analyst with Info-Tech Research. "This a lower-cost Zip for the lower-cost PC buyer."
The internal device will require some installation, unlike the "plug-and-play" SCSI-based external Zip models. But the hassle of installing an internal drive will be somewhat alleviated by a start-up kit that includes some necessary hardware and a CD-ROM to walk users through the installation.
"If a consumer isn't used to cracking open the PC case, it's kind of a formidable task," Pine noted. "If they have a way to simplify the experience, they're adding some value to the product."
Iomega is hoping that the release will boost its sales. The company's $18.6 million first-quarter loss was in line with previously announced expectations, compared to a profit of $23 million in the first quarter of 1997.
It attributed the loss to weak international sales, combined with about $20 million in incremental marketing expenses. The company said it expects to post a small loss or, at best, break even for the second and third quarters. |
