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Iomega Beefs Up Its Zip Disks, Drives

Iomega Beefs Up Its Zip Disks, Drives

Expert Notes Users May Look at Price First When Considering Storage

BY BRAD GRAVES

Staff Writer

Faced with declining sales of its flagship product, Iomega Corp. has added more speed and heft to its Zip drives and disks.

The San Diego-headquartered company last week introduced a Zip computer storage system with twice the speed and three times the capacity of its predecessor.

The desktop computer drive runs pocket size, removable disks that hold 750 megabytes of information , a little more memory than a CD.

The product builds on the best-selling Zip drive line that Iomega introduced in the mid-1990s. The original product held 100 megabytes. In the days before home CD burners, 100 megabytes was a lot of information to put onto a removable disk.

“It was a hot technology five years ago,” said Stan Corker, a San Diego analyst with Lancaster, Pa.-based Emerald Research.

Iomega boosted Zip’s capacity to 250 megabytes in 1999, but sales have been falling. The company reported last month it shipped 969,000 Zip drives and 6.6 million Zip disks in the quarter ended June 30. It shipped 1.2 million drives and 8.6 million disks in the same quarter of 2001.

Primarily, the Zip drive is a home computer peripheral. Sixty-two percent of Zip usage happens there, according to Iomega market research.

Some 30 percent of Zip drive usage is in business. Graphic design is one key industry.

Iomega makes its money by selling its disks, which Corker called a high-margin product. Retailers sell the Zip 750 disk for $15, or $100 for a pack of eight.

By contrast, a local discount electronics store was advertising blank CDs for 19 cents apiece in a 100 pack.

Corker said he personally prefers Zip over CDs when backing up his files, but added most computer users aren’t as educated about the merits of the products and probably look at price first when considering storage.

Iomega’s advertising campaigns pooh-pooh CDs, suggesting they are too fragile to hold important information. Zip disks come in a hard plastic shell.

Company publicists also note the Zip disks can be password-protected to prevent strangers from reading them.

Probably only 5 percent of the market cares about that sort of security, said Corker.

Iomega has several other product lines, though they are not as ubiquitous as Zip. Iomega has shipped 48 million Zip drives and 300 million Zip disks.

The company recently discontinued its Jaz drive line, which runs 2 gigabyte disks.

Iomega announced earlier this year portable hard drives that hold up to 30 gigabytes, external hard drives that hold up to 120 gigabytes, and rack-mounted storage devices for computer networks, which hold up to 480 gigabytes.

The company also now makes CD burners.

Iomega moved its corporate offices from Utah to San Diego last year. The company employs 80 here, 500 in Utah and 2,000 worldwide.

The company trades on the New York Stock Exchange under the symbol IOM. It closed Aug. 15 at $11.95 a share. Its 52-week range has been $5.50 to $13.90.

Iomega publicists said software that comes with the Zip 750 is a key part of the product. One application can be set to automatically back up data. Also included is synchronization software , which ensures data on two computers is the same.

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