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Technology Stocks : Imation (IMN) -- Ignore unavailable to you. Want to Upgrade?

To: Ronald Ashkenazy who wrote (30)	4/10/1998 2:45:00 AM
From: Ronald Ashkenazy	Read Replies (1) \| Respond to of 103

"Analysts at International Data Corporation in Massachusetts say the market for superfloppy drives will grow. They expect the drives to be pre-installed in 60 per cent of all the PCs sold in 2000, and in 96 per cent in 2001, compared with just 8 per cent last year." go2.guardian.co.uk April 9, 1998 Stiff competition for superfloppies The battle to set the industry standard for superfloppy disk drives took an unexpected turn last week, writes Jack Schofield. Four notebook PC manufacturers - Compaq, Hewlett-Packard, Acer and Hitachi - announced that they would offer the option of a 120-megabyte Mitsubishi SuperDisk with their computers. The half-inch high drive fits the same bay as a standard floppy, Zip drive or DVD-Rom. This challenges the attempt by Iomega, Zip's manufacturer, to set the standard for the next generation of removable disks with its popular 96-megabyte drive. Imation Corporation, a $2 billion floppy disk manufacturer that makes superfloppies for the drive, says the SuperDisk consortium is targeting the notebook PC market where the product has a natural advantage: the drive is compatible with existing 3.5-inch floppy disks while Iomega's Zip drive is not. This suits portable computer users who rarely have room for two drives. Until last month, Utah-based Iomega had looked unbeatable in the battle of the superfloppies. Then its president and chief executive officer, Kim Edwards, resigned following board disagreements about strategy. The company had also revealed that it will announce a $25 million loss in its current financial quarter. Iomega had been stunningly successful since Edwards took over. Annual sales had grown more than tenfold - from $141 million in 1994 to $1.7 billion last year. With the launch of its low-cost Zip and Jaz drives, Iomega redefined the PC storage business. The Zip has been Iomega's most successful product, with sales of 12 million drives in three years. The rival SuperDisk is a long way behind with sales of 1.8 million drives since its launch in June last year. Japan's Sony also wants a slice of the superfloppy market. Sony and Fuji Photo Film have developed a 200-megabyte HiFD floppy disk, which will also read existing 3.5-inch disks. It will be launched this summer. Sony pioneered the 3.5-inch format and now makes more than 10 million drives a year. As PC manufacturers pay more for superdrives - œ50 each compared with œ10 for ordinary floppy drives - switching production would give Sony a boost. The company would also benefit from sales of œ5 superfloppies displacing those of conventional discs, which cost 50p. Another challenger is SyQuest's new SparQ drive, which stores a gigabyte (1000 megabytes) on disks that cost about œ25 each. The superfloppy war should be good for consumers, with competition driving down prices. The price of SuperDisks and drives has halved since launch, and on January 8, the price of 120-megabyte floppies went below the price of Zip disks. "We're heading for the œ5 diskette this autumn," says a spokesman for Imation. Analysts at International Data Corporation in Massachusetts say the market for superfloppy drives will grow. They expect the drives to be pre-installed in 60 per cent of all the PCs sold in 2000, and in 96 per cent in 2001, compared with just 8 per cent last year. Iomega's response - from European managing director Kevin O'Haire, based in Geneva - is that "we're back to business as usual". The company also dismisses the competition: "We don't consider SyQuest a competitor," he says. "It's just another storage manufacturer trying to survive." The performance of the SuperDisk is, he says, "somewhat anaemic". As for Sony, "certainly we're interested in what they're offering," O'Haire says, "but our customer research didn't say they wanted a 200-megabyte drive that was slow." Even in the superfloppy market, it seems, size is not everything.