"Iomega Scoops Up SyQuest's Assets"
SyQuest continues to sell, support products after
bankruptcy; but Iomega buys inventory,
intellectual property.
by Peggy Watt, PC World
January 13, 1999, 6:35 p.m. PT
Experts say the choice of storage alternatives is
shrinking as the market hits a plateau: The most recent
proof is evident in Iomega's bid to buy technology from
SyQuest Technology, which is trying to support users
after its reorganization in bankruptcy.
Iomega and SyQuest announced the agreement
Wednesday. Iomega will pay $9.5 million for SyQuest's
assets, including intellectual property and inventory,
pending court approval.
Meanwhile, SyQuest customers can get technical
support, parts, and repairs online. SyQuest's Web site
was down briefly in November after the company filed
for reorganization under Chapter 11. The site now
sports a FAQ list directing users to technical support,
repairs, and even sales--yes, SyQuest is still selling
products.
Iomega will not support or market SyQuest's products,
says Fred Forsyth, president of Iomega's professional
products division.
"We are not assuming any warranties or
responsibilities for products in the channel or
customers' hands, or any that we get in inventory,"
Forsyth said. In fact, Iomega may sell back some
inventory to SyQuest to use the parts in repairs.
But Iomega believes it can use some SyQuest
technology in its own products. "SyQuest has been
around since 1982 and has been building rigid disk
drives based on cartridge technology for many years,"
says Fara Yale, chief analyst at Dataquest in San
Jose, California. "SyQuest has amassed technology
that Iomega obviously feels it can use."
The market as a whole is slowing, which contributed to
SyQuest's woes, Yale notes. Dataquest's
storage-market research is still in progress, but she
believes sales will not hit the company's forecast of 2.3
million for 1998. Dataquest is revising its forecast of 8.4
million sales in 2002.
SyQuest's timing has not always been as good as its
technology, she notes. Its SparQ product was well
received, for example, but the market hit a plateau after
its release.
Other factors may have also hurt SyQuest. Long-held
conventional wisdom about the removable storage
market says that the real money is made on the
media. You can make very little on the drive--as long as
you're making profit selling data cartridges. Rumor has
it that SyQuest followed this path to a dead end,
actually selling some of its drives at a loss. If you can
believe insider gossip, this strategy ultimately led to
the company's current straits.
The agreement between Iomega and SyQuest clears
up some bad blood, ending pending patent and
trademark infringement litigation between the two. The
trial, first scheduled for April 1999, was delayed when
SyQuest filed for bankruptcy.
______________________________
(thanks to "kramont" on the Yahoo! SYQT thread for finding and posting the article)
Regards - Dale |
