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

To: David Colvin who wrote (6062)	1/18/1999 3:08:00 PM
From: Ken Pomaranski	Read Replies (1) \| Respond to of 10072

I'll post my model tonight, for the one person who cared. Here are my views on the removable storage market: Yes, I do agree that things look better for Iomega since the demise of Syquest and the delay of the Sony drive. But their fates just prove my points even further: that money cannot be made reliably in this market. Here is the fact: removable storage is a luxury item that people can (and do) live without. Secondly, OEMs control the pricing of this device, NOT Iomega. Understanding and embracing these facts are critical to understanding Iomega's position, and why they have become less profitable as they have sold more drives. This was predicted 2 years ago. If you don't embrace these facts, hit the 'NEXT' button, because the rest of the post relies on predictions based on these statements... Luxury items go through different (and predictable) product cycles than essential consumables. Luxury items have a strong start, level off, then eventually die off, as the next 'luxury' takes over. The first part of the cycle is characterized by 'fad' status and very high margins. This is euphoria. Eventually, saturation occurs, prices drop, and competition moves in. Iomega would like you to believe that ZIP disks are consumable.. They really are not. People buy 6-10 then stop. So they need to keep finding new customers, which is very, very expensive. Remember the 'Hail Mary' play? this was a ploy to try to get people to buy more disks... So what can Iomega do? They need to get people to store stuff on disks and LEAVING IT THERE so that they buy more disks. They also need to prove to OEMs that including a ZIP drive is worth the incremental factory cost. Has it been proven yet that if you had two $800 PCs that the one that includes a ZIP sells more? Enough to make up the factory cost? I doubt it, since when all is said and done a PC manufacturer doesn't make any more on a PC than $30-50 per unit... The real problem Iomega has is that there is NO demonstratable reason that an OEM should include their drive in the box. (don't forget 'click of death' and the resulting warranty cost increases that OEMs must absorb by including a ZIP inside..) Just some thoughts... Got to run... kp