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

To: Ken Pomaranski who wrote (7406)	2/17/1999 1:11:00 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 10072

Ken, Rocky, or whoever you are <<See, you guys want it both ways here... If it's sold as an option, penetration is lower but margins are higher. If it's sold as standard, Iomega is squeezed by having to meet the floppy price point. >> Iomega has never been "squeezed", as you say, by any OEM to meet the floppy price point. Zip costs are constant; no OEM would expect Iomega to drop the price on Zip to the point where the inclusion price is less than the fixxed cost price. Such a scenario would bring disaster for both the OEM's inclusion and Iomega. The OEMs are aware that Iomega must also make a living. If an OEM includes zip as standard throughout, then the cost of that box is configured to include the zip as standard. Your statement is implying that Iomega MUST include the zip as standard in EVERY box in order to be successful - nothing is further from the truth. Iomega gets to 36 million zips by year end you won't see a $6 stock - the mathematics simply don't work that way. The current price has more to do with emotional despair than anything going on at Iomega and the box makers. And you are adept at playing against people's fears/emotions.

To: Ken Pomaranski who wrote (7406)	2/17/1999 1:16:00 PM
From: Cogito	Respond to of 10072

>>But it is also true that they know they cannot include them as standard without negatively impacting profit margins. A company that needs to sell a computer at a particular price point will make LESS money on that computer by including a ZIP.<< Ken - True, if the PC maker is only trying to hit a specific price point, say $799, then it's unlikely that they will include a Zip drive standard. What you're missing there is that the PC makers don't all adopt the same strategy. Some, like Dell, have found that they can charge more for a box with Zip built in. They don't want to sell only the lower end machines. So they add built-in Zips to some models to entice buyers to spend a little more. Other companies, such as Gateway, concentrate instead on selling the Zip as an add-on. Both approaches accomplish two things. They sell more Zip drives, and they help the PC company make money. So we can have it both ways. As for the validity of the razor blade model, I can only point to the fact that the drop in tie ratios that you predicted would occur as OEM percentages rose has not yet been seen. This is partly due to the demand elasticity factor exploited by Iomega with the disk pricing actions last year. And don't worry, the disks are still very profitable. - Allen

To: Ken Pomaranski who wrote (7406)	2/18/1999 1:03:00 AM
From: FuzzFace	Read Replies (1) \| Respond to of 10072

<My question is: would you pay $10 billion for a floppy disk manufacturer??> Huh? Last I looked, IOM had 270M Shares at 6+ each. Comes out to about $1.8B cap. Where do you get $10B? Aside from your simplistic analysis, backed by your usual atrocious math, good post! I'm going to devote 3 nanoseconds to entertaining the notion that you once knew what you were talking about - then you started typing and something went terribly wrong.