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Wednesday, February 27, 2002
 Iomega Tries to Put Back the Zip with Bigger Disks
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Message Text: Troubled storage solutions provider Iomega hopes to recapture its lead in the desktop storage market with the launch of a 750-megabyte Zip disk this summer, followed by a disk capable of storing 20 to 30 gigabytes next year.

Many of these workers would need high-capacity portable storage. "Mobile users are also facing the higher possibility of data loss due to computer viruses and system thieves. "That's why they need more protection for their valuable master copies of their crucial, irreplaceable information," he said. The company foresaw removable hard-disk drives becoming more popular.

"If you need to travel, you take it [the removable hard-disk] out of your computer, you go to the hotel, plug it in the computer there, and it comes up like yours, with your interface and all your applications," Mr Heid said. He believed removable storage solutions would be widely used for hard-disk mirroring, data migration and disaster recovery. Mr Heid said the market for portable hard drives was estimated at 400,000 units this year.

Of these, Iomega sells 1,600 to 2,000 units a week of its Peerless drive - a 10 or 20GB 6.35cm unit for IBM's Travelstar hard disk launched in June. He said the Peerless drive had a 20 per cent market share in the portable hard-drive market. Iomega is due to introduce two more external hard-disk drives of 20 to 60GB and 60 to 120GB this summer.

The 20 to 30GB Zip solutions should be on the market by Christmas 2004. Mr Heid said 20GB "means a hundred CDs, which means a CD library. In the CD world, burning music is a killer application which people always need to do with a solution". "If you look at DVDs, the killer application was not there."

In the optical storage market, the company hopes to increase its market share for external CD-rewritable drives from 27 per cent to 30 per cent by this year. It plans to enter the DVD drive market and capture 10 per cent later this year. Iomega was widely hailed for its innovation in the mid-1990s with the success of its 120MB Zip product.

However, the format lost its early popularity with the wide adoption of CD-RW, which offers discs that cost less than HK$10 and can store 650 to 700MB. The company made a profit of US$189.9 million in the fourth quarter of last year, a US$141.2 million decrease from the same quarter in 2000.

Mr Heid said the company was still financially strong with US$329 million cash and had cut operating expenses by 46 per cent from US$100.6 million in the fourth quarter of 2000 to US$54.1 million this year. He predicted the company would have solid growth next year with investment in new products and market segments. These include solutions for network attached storage (NAS), which enables all-in- one removable solutions for storage expansion, back-up and archiving.

Research firm Gartner forecast global NAS sales would increase from 150,000 this year to more than 500,000 in 2005. Gartner predicted Iomega would sell 5,000 units this year, winning a market share of 3.2 per cent. NAS would target the home office and small and medium-sized business. International Data Corp research manager Bryan Ma said Iomega faced keen competition from competitors worldwide.

"They did a great job five years ago. But today they are not in quite the position they were previously," Mr Ma said. He said the 20GB removable hard-disk plug-and-play concept was not practical. "I think it is a very appealing idea but I think in execution it is a lot more difficult," Mr Ma said.

Other companies, such as network and hardware firms, had been working on the idea but progress was hindered by various problems, including how to ensure quick transfers.
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