An email I sent to J. Michael Pinson from MarketMavensReport.com
>>
Mike,
I just finished reading your well written analysis on Iomega.
tfc.com
I had a few comments and questions:
1) You failed to mention why it is that although the LS-120 has been on the market for well over two years now, consumers seem to have chosen Zip drives instead by a factor of 5 to 1 (nearly 20 million Zip vs 4 million LS-120). Why do Iomega's Zip drive unit volumes continue to grow and LS-120 continue to stagnate?
2) You mentioned the price of the media for the Zip250, saying that $16.95 per disk was too expensive. Perhaps. But you failed to mention what HiFD media will cost as well. I don't even know what it is. Do you?
3) Let me point out a certain fallacy: that backwards compatibility with 3 1/2" 1.44MB diskettes in a high capacity removable drive is important. While it is true that the installed base of 3 1/2" drives is on the order of 100's of millions, let me point out that these drives are already installed in the vast majority of PC's out in the world. These PC's don't exactly need another 3 1/2" floppy drive, do they? Isn't backwards compatibility in this context rather moot?
4) To quote from your own story: "While the 250-Mbyte Zip is somewhat
attractive, customers will have to abandon their existing 100-Mbyte Zip drives to upgrade. Some diehard Iomega fans may stand shoulder to shoulder and say, “So what!” " Couldn't the same argument be made concerning existing 3 1/2" floppy drives when upgrading to an LS-120?
Why would these existing PC's require an all-in-one LS-120 drive to replace their 3 1/2" floppy drive? To save space? Possibly. However, with an LS-120 drive, while you gain backwards compatibility with 1.44MB diskette, which by any account and although it is widespread, is clearly on its way out, you lose compatibility with the high capacity removable storage standard - the Zip disk.
5) "However, Iomega will be forced to continue to bow down to the computer manufacturers and cut prices with the OEM version of the Zip drive products. There will be no mercy in 1999 from removable disk competitors." I agree with this wholeheartedly. Just remember that while it is true that Iomega may have to sell its OEM drives at cost, or even at a slight loss, the high margins are in Zip disks. Yes, I know, you say you never use them and never buy them - and this should worry Iomega.
6) "However, the internal Jazz drive retails for about $399, and the 2
Giga-byte removable disks are a whopping $125 each." A slight correction: Jaz2 drives (both external and internal) now retail for $349 and disks are $100 each in packs of 3.
7) Your comments about CD-R drives are accurate - to a certain extent. Why pay $100 for 2GB of storage when you can pay only $1 for 650MB of storage? Well, first of all, let's remember that although CD-R disks are cheap, they aren't rewriteable. While CD-RW is rewriteable, media cost is higher at around $16 per disk. But the worst things about CD-RW: formatting and compatibility with existing CD-ROM. It takes about an hour to format CD-RW and during this time, while you can use your computer (although significantly slowed), any use of the computer during formatting considerably lengthens the time required to format.
How do I know? I recently purchased an HP-8110i CD-Writer Plus.
Yes, I realize that in the future, some companies may introduce
pre-formatted CD-RW disks - but you can be sure they will be even more
expensive. And yes, the newest CD-ROM drives supporting MultiRead
capability can read CD-RW. However, the vast majority of CD-ROM drives
installed in PC's cannot.
You mentioned the Hi-Val docking station as a storage solution that might hurt Iomega in 1999. I seem to remember a product that was called Eagle's Nest. It was capable of accepting all sorts of removable storage drives: SyQuest, Iomega, as well as Imation. This product didn't really catch on, did it?
regards,
Lipo Davis
P.S. Have you heard of Iomega's Clik! drive ? What are your thoughts on USB Zip and its tie-in with iMac?<<
Philip (aka Lipo) |
