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Iomega to ship HipZip MP3 player

The struggling company, once known for its PC storage products, announces its first entry into the portable digital audio market with its MP3 player.

Iomega today unveiled its first MP3 player, as the struggling storage maker latches onto one of the hot technologies of the moment.

Iomega today announced its HipZip digital music player, the company's first entry into the portable digital audio market and its latest effort to shift from its dependency on PC storage products.

HipZip--Iomega's new name for the portable storage previously dubbed Clik--will be available Sept. 24 for $299. Iomega is touting the HipZip storage format, which is based on its own proprietary technology, as cheaper and more readily available than the hard-to-find flash memory, which is used in conventional MP3 players.

"This is a major breakthrough in digital audio and gives consumers the ability to buy the music they want at the price they want to pay," Iomega chief executive Bruce Albertson said in a statement. Iomega will charge $10 for a 40MB disk. MP3s typically take up 5MB to 10MB of space.

The company also announced partnerships with music companies such as EMI and publishing houses including Simon & Schuster.

Iomega will use Microsoft's Windows Media Player on its new device.

Roy, Utah-based Iomega made its name on PC storage, namely its Zip and Jaz drives. But as hard drives zoomed in storage capacity, sales of these products have flagged. Iomega is not alone. Its chief competitor, Syquest, went out of business last year.

Iomega's stock hasn't crossed the $10 mark in more than two years and has hovered in the $3 to $6 range throughout 2000.

Last year, Iomega attempted to strike back, unveiling ZipCD, a rewritable CD drive. Rewritable CDs have become increasingly popular as storing and recording digital music via the PC has taken off.

"We decided that instead of a storage company, we have to be a company that helps consumers manage data in their lives," said Paul Jacobs, worldwide product manager of new products for Iomega.

Toward that goal, Iomega decided on the rebranding of Clik. The existing inventories at retailers will be relabeled, Jacobs said, and other new Clik products for digital cameras, handheld computers and PCs will be rebranded Pocket Zip. "There's so much equity in the Zip name," he said.

Iomega's new focus on rewritable CDs and digital music players does not mean the company is abandoning its core products, Jacobs said. "If the question is: Is there a role for removable storage in our lives today? The answer is: Boy, there sure is."