After posting a loss in the last quarter and seeing revenues decline nine percent year over year, Iomega is looking to boost itself back to profitability around sales of the new 250MB Zip drive introduced at Comdex, which is priced at $199.
The drive can read and write to older Zip 100MB disks, meaning that customers who use the new Zip drive can share information with older Zip drives.
Also, Iomega unveiled an initiative to allow playback of copyrighted material such as music and videos that are downloaded via the Internet. Using technology called "Record/Play," developers will be able to encrypt music, content, or data to Iomega storage products using a copy protection technique that "binds" the content to the disk, Iomega said. The content can then be replayed only from the disk to which it was recorded.
As a part of the initiative, Iomega announced partnerships with LiquidAudio (LA) to allow consumers to preview and purchase CD-quality music from Internet sites using LA's playback software. The software will be bundled with Iomega drives starting next year.
The technology could help boost sales of multimedia content over the Internet, which has to date been stymied by a number of legal issues surrounding copy protection. The Recording Industry Association of America (RIAA) filed a lawsuit against Diamond over sales of its Rio audio device, which plays compressed music files that originate on the Internet. The RIAA requested but was not granted a restraining order to halt the sale and distribution of the device.
Along with the push to create new uses for its drives, the company is offering a 100MB Zip(R) drive with a Universal Serial Bus (USB) connector. The Zip USB drive is expected to be available in select U.S. retailers and catalogers by Thanksgiving for an estimated retail price of $149, Iomega said.
In an effort to show support for as yet unreleased technology, called Clik, for handheld devices such as digital cameras and handheld computers, the company said Compaq has signed a non-binding letter of intent to offer Clik Mobile Drives with their current handheld PC. Compaq is also evaluating use of the Clik drive as a built-in feature for upcoming portable devices, Iomega claimed.
Iomega said its Clik Mobile Drives are expected to be available in the U.S. no later than the first quarter of 1999 for an estimated retail price as low as $199, but given at that price, it constitutes a significant portion of the price of most of the products it will be bundled with, it is unclear how popular the new device will be.
Part of the marketing push stems from the fact that Iomega's fortunes have been on a downward slide in 1998. The company has posted steep losses, witnessed the departure of CEO Kim Edwards, and is fending off lawsuits over quality control problems with its products. In the last 30 days, though, the company has hired a new CEO and seen its main competitor in the removable storage business, SyQuest, close its operation.
The new 250MB Zip drive is expected to be available in the fourth quarter of 1998. Iomega said 250MB Zip disks for the new drive will be available for an estimated retail price of as $16.65 each when purchased in a six-pack.