Article on IOM's strategy
Iomega Zips Up Non-PC Storage
Market
(12/02/98, 3:13 p.m. ET)
By John Gartner, TechWeb
Move over Xerox and Kleenex -- Iomega plans to join
the ranks of companies whose products define their
categories, this time in the digital storage market.
Over the past few weeks, Iomega has signed a flurry of
deals with leading peripheral manufacturers such as
NEC, Lexmark, WebSurfer, Sharp, and Compaq in an
attempt to extend the ubiquity of its Zip and Clik
removable storage drives.
The agreements will result in a series of consumer and
home-office digital devices that can interchange data
with PCs. Iomega, based in Roy, Utah, has signed
deals to ensure compatibility with vendors developing
next-generation set-top boxes, printers, scanners,
handheld PCs, and digital cameras. It's also targeting
game consoles and global navigation systems.
Adding storage to Internet-access devices is a potential
e-commerce windfall, in Iomega's estimation.
"Removable storage is going to transform set-top boxes
and how they are used for Internet access," said John
Sperrazzo, business-development manager.
Integrating the Zip and Clik drives into Web-enabled
devices provides storage capacity for electronic sales of
software, games, images, and music. "Adding
removable storage can turn Internet-access devices into
cash registers," Sperrazzo said.
Iomega also hopes the Zip and Clik drives will become
standard data-exchange formats for digital imaging, one
of the motors behind PC sales, according to Stephen
Baker, hardware analyst at PC Data, in Reston, Va.
The company has already signed deals to make that
happen: The Microtek ImageDeck scanner has a
built-in 100-megabyte Zip drive, and Lexmark's Photo
Jetprinter 5770 lets images be printed from a Zip drive
without an attached PC.
The 40-MB Clik drive will be integrated or compatible
with Epson's PhotoPC 700 and PhotoPC 750Z digital
cameras, as well as an Agfa scanner due for release in
the second quarter of 1999.
Handheld PC manufacturers are also lining up behind
Clik. The NEC MobilePro, Sharp Actius Ultralite
Notebook PC, Mobilon Pro and Mobilon TriPad, and
a future Compaq C-series of handhelds will all support
Clik for sharing data with desktop PCs.
Iomega has created a non-PC storage division because
users want to store and exchange images without the
complexity of PCs. "There are lots of people who want
Internet access and want to save images and e-mail, but
don't want a PC," said Sperrazzo. WebSurfer Pro
Internet TV set-top boxes will ship by year's end for
$249 and connect to parallel port Zip drives for saving
Web content.
Iomega now dominates the desktop removable storage
market, having sold almost 20 million of its flagship Zip
drives. Iomega products held the top five retail sales
slots for external storage devices in October, according
to PC Data. One of Iomega's competitors, SyQuest,
filed Chapter 11 bankruptcy in November.
But dominating an underachieving market such as
removable storage may be a Pyrrhic victory for Iomega.
Aiming for a "razors and razorblades" strategy -- selling
drives cheaply and making money on the disks -- won't
work, said Baker, if "no one's buying the razors."
Indeed, customers aren't buying in volume, and that's
because $10 for a 100-MB Zip disk is still expensive,
according to PC Data. Iomega said it has sold 100
million disks, or slightly more than five per user.
"They're caught in a vicious circle where people won't
use them until they drop the price, and they won't drop
the price until more people are using them," said Baker.
Last month, Iomega said it will begin outsourcing
drive-manufacturing. Toshiba will customize a slim
version of the Zip drive for its laptop computers, and
NEC will make a mobile version of the Clik drive.
Iomega remains the sole manufacturer of Zip and Clik
media. |
