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

To: John Solder who wrote (9248)	4/19/1999 10:26:00 AM
From: David Harker	Respond to of 10072

>To feel better about the 10% number for Clik! I would like to >see more real products that would cause the public to run out >and buy one retail. I agree w/ you, for the next quarter (which is what the 10% goal pertains to). For the long-term, I think the key to Clik! success is for lots of devices (cameras, phones, etc) to come w/ Clik! built-in, w/ the Clik! being a key "attractive feature" of that product, like Zip is now, in PCs. Until that happens, though, the Clik! drives will need to selling well, so people can use their Clik!'s to transfer info between several devices they own (ie, camera to PC, etc).

To: John Solder who wrote (9248)	4/19/1999 11:06:00 AM
From: David Colvin	Read Replies (3) \| Respond to of 10072

John, It's still unclear to me exactly where Clik! is to have it's major success point. Clearly IOM is presenting it as the "do it all" drive, from laptops to phones to cameras. To feel better about the 10% number for Clik! I would like to see more real products that would cause the public to run out and buy one retail. My sentiments exactly, so to stimulate some discussion on the subject of Clik! sales for 1999, I've prepared the following. From the Q1 1999 earnings news release: Fact - IOM sold 24,000 Clik! drives in Q1 1999 Fact - IOM sold 67,000 Clik! disks in Q1 1999 Fact - IOM's revenue for these sales was $5 million The disk to drive ratio was 2.79. Also, all Clik! drives sold so far are external and definitely come with an included disk (I got a free Clik! drive with my Agfa ePhoto 1680 camera and it included one disk). I'm going to conservatively estimate IOM revenues of at least $10.00 average per disk for the mix of combinations available. 2-packs retail for $29.95, 4-packs retail for $49.95 and 10-packs retail for $99.95. With that said, subtracting 24,000 from the number of Clik! drives sold and the result should isolate the "free standing" disks sold. The result is 43,000. Now, using $10.00 per "average" disk IOM's pure disk revenue would be $430 thousand. Subtracting the $430 thousand from $5 million yields $4.57 million revenues for the 24,000 Clik! drives that included one disk. This represents an average of $190 in revenues for an "average" Clik! drive for, again, the mix of combinations available. The drives for mobile computers retail for $199. The drive for digital cameras retail for $249. The Clik! drive plus retails for $299. For now I will create an imaginary "bundle" of 1 drive and 2 disks with the drive at $190 and the 2 disks at $20. I will use $210 for the "bundle". To sell $175 million worth of these "bundles" during Q2 - Q4 of 1999 would require the sale 833,333 "bundles". Adding the additional $175 million to the already realized Clik! revenue of $5 million for Q1 1999 would yield $180 million in total Clik! revenue for 1999, and I believe that would approximate 10% of IOM's total revenues. By the way, I would expect the disk tie ratio to be much higher in reality. There is only one problem with the above scenario. We know that Agfa is going to introduce a camera with an internal Clik! drive in mid 1999, so that would require internal OEM drives, the majority of which will likely not be produced by Iomega. Instead, the lion's share will probably be produced by one or both of Iomega's Clik! drive licensees (Citizens Watch and NEC?) with negligible royalty income for Iomega. With all this said, I'm going to "go off the deep end" here and make some "brave guesses". For the remainder of 1999, Iomega will sell: - 300,000 of my imaginary $210 external Clik! bundles above = $63 million.. - 900,000 additional disks to complement the external "bundles" at $10 each = $9 million. - 200,000 internal IOM manufactured OEM drives at $60 each = $12 million.. - 2,000,000 additional disks to complement all internal OEM drives at $10 = $20 million. The above estimate totals $104 million. Add $5 million from Q1 and the total Clik! revenue for 1999 would be $109 million, far from 10% of Iomega's total 1999 revenues if my $1.79 billion estimate for 1999 is accurate. The problem with all this is the fact that I believe Jodie Glore is not prone to making predictions that he can't fulfill, so he likely knows things that none of us know (OEM partners, etc.) Everyone is, of course, certainly welcome to shoot holes in my above rationale as long as they present logical arguments and are civilized about it! Dave