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Tuesday, August 14, 2001
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"...There's not much zip in sales of Zip disks. Nor is there anything jazzy about Jaz drive sales. Barring a miraculous surge in demand for Zip disks and drives, Iomega's best strategic move may lie in helping other electronics companies design devices that incorporate its storage technologies.
That was also before CD drives that can record or "burn" data for a fraction of the price of Zip disks became prevalent. While the CD drives themselves, which range in price from about $150 to $350, are more expensive than a sub-$100 Iomega Zip drive, the discs are the problem. A single 100-MB Zip disk sells for more than $10, but you can buy a pack of 25 CD-R discs, each with 650 MB of storage capacity, for less than $20.
Iomega did get into the business of selling its own brand of CD burners and discs, but Jim Porter, president of Disk/Trend, a storage market research firm in Mountain View, Calif., says it's unlikely the company is making much money from them. "They're basically reselling drives made by other companies. And there's no significant margin to be made in reselling," Porter says.
Likewise, it might help if Iomega gets out of the business of selling competing technologies. Its CD-RW drive division reported $21 million in losses on $18.3 million in sales. Also looming on the horizon is an update to the core Zip product line. Little is known about what Iomega has in store. Higher capacity disks are certain, but it must have a good price-competitive position against CD-based products in order to produce a badly needed jolt in sales..."
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