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Non-Tech : Iomega Thread without Iomega -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (1794)	9/25/1998 3:04:00 AM
From: Philip J. Davis	Read Replies (1) \| Respond to of 10072

Gottfried, The action in the stock lately is disheartening, but considering the state of the market in general and continued worries about Iomega's business plan, it is not surprising. The IBM Microdrive really has me worried. A 340 MB disk drive the size of a quarter is compelling. IBM has demonstrated that the barriers to entry in this market are not as high as previously thought. Iomega's Clik! strategy of cornering the PDA/cell-phone/palmtop-computer/digital-camera niche will necessarily require that prices be slashed sooner than expected. Granted, the Microdrive will initially be targeted at professional/high-end digital cameras and the drive itself will certainly be expensive (I'm assuming at least $350). Neverthless, in order to succeed, Iomega must capture mindshare as well as marketshare as quickly as possible. Clik! must have a very large installed base by the time Microdrive ships. If IBM notices that Iomega is making a lot of money in the low end, you can be sure that IBM will either reduce prices on the microdrive or develop it's own low end product. I don't have to mention what price cuts do to net profit margins and stock prices. This will happen inevitably. Of this I am sure. The real question is whether Iomega has the inventiveness and engineering capability to keep developing new and compelling products before anyone else. Only in this way can Iomega assure high net profit margins since in the early stages of a product cycle - while the competition is racing furiously to ship its own competing product - high margins are easy to maintain. Iomega has clearly demonstrated its ability to stay ahead of the technological curve, coming out with the Zip, Jaz and Ditto Max products before anyone else had similar products. With this in mind, I have trouble envisioning new storage paradigms that Iomega can exploit, other than continually making its drives smaller and of higher capacity. But then again, I'm not exactly the "vision" type. Clik! would certainly be a great product. I hope to hell it works. What does this all mean in terms of Iomega's stock price? Who knows. I hope it goes up ;) Philip