<< Ken, Your answer to BB's question was a good reiteration of your well known views of Iomega Vs OEM and your opinion that Clik! is an
immediate failure. However, you didn't answer BB's question:
If the removable market hasn't much potential for profit and is not
worth entering why are so many big boys trying to enter it: IBM, SONY,
Compaq ( Superdisk consortium ) >>
You're right! I went off on a tangent again...
Actually, that is a very good question. The reason: The market is actually large and growing. This I will conceed. However, there is very little barrier to entry. Any company that takes a big lead (like Syquest in the early 90s and Iomega in the mid 90's) just welcomes competition. Just like the hard disk industry. This is why, when I invest, I STAY AWAY from component suppliers. They are very cyclical and are at the whims of their OEM's. Low barriers to entry, lot's of competition = low and cyclical margins = the advantage goes to manufacturers that are vertically integrated and can handle the nature of the business. (The big guys!).
Because it's growing, and is easy to enter, everybody and their dog will get into this market. The winners will be those who can compete on price, and basically FORCE OEMs to include the device. Since Compaq, Sony, IBM and HWP have products farther up in the value chain, they can eat the cost of the component. What drive do you think Sony will include in their digital cameras? How can Iomega get OEMs to include the device? basically by giving them away. There is no other way...
I love businesses that sell directly to their customers and can charge for an EXPENDABLE recurring revenue stream. (warranty, service contracts, etc..).
Just my humble opinion...
Good luck!
kp |
