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Non-Tech : Iomega Thread without Iomega
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To: Gottfried who wrote (8973)4/12/1999 7:49:00 PM
From: HRP  Read Replies (1) of 10072
 
<< ... Iomega made $159m on ZIP in '98 and $286m in '97. While I know
the company acknowledged lower profit margin on OEM ZIP, I don't
recall they admitted to a loss. If anyone has a reference for this,
please post it. >>

Gottfried,

When Rocky made this claim months ago, I asked Tyler Hatcher if that was true. He E-Mailed me back that Iomega had previously acknowledged a small loss on each OEM 100 MB Zip drive. I have not saved the E-Mail. You may want to ask him again.

Clearly it would be inappropriate to apply that statement to 250 MB Zip drives since pricing for those drives would have been separately negotiated.

However, Rocky has a "point." If Dell can negotiate a no profit deal with Iomega for 100 MB drives, they have the power to negotiate a "good" deal (from their perspective) on 250 MB drives.

If every person who buys a 250 MB drive as part of a Dell system would have bought the drive in the after market had the drive not been available from Dell - the deal with Dell is bad news not good!

The question is how often will that happen? Iomega should have done a study on this issue in order to determine a price acceptable to them. Since Iomega hired two PHD statisticians several months ago, I assume the study was done.

hrp
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