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Price cuts, new Jaz for Iomega

Iomega discounts its 1GB Jaz while rolling out a 2GB version, as well as a package that allows users to edit digital content on their PCs.

Iomega (IOM) cut prices on its 1GB desktop and mobile disk drives while rolling out a 2GB version and a multimedia package that allows users to digitize and edit video content on their PCs, but the moves likely won't be enough to stanch growing competition in the removeable storage market.

The Roy, Utah-based company reduced the cost of its 1GB Jaz drive to $299 from $399 for the external model and to $279 from $299 for the internal model.

Simultaneously, Iomega said it has begun shipping a 2GB Jaz storage drive, targeted at graphics design and other multimedia professionals, as well as its Buz multimedia producer for the PC.

Priced at $649 for the external model and $549 for the internal model, the 2GB Jaz models operate at an average transfer rate of 7.4MB/sec, the company said. They include a software suite and provide twice the capacity and up to 40 percent higher performance than the original 1GB Jaz drive, according to the company. The 2GB drive also will read 1GB disks.

2GB Jaz disks are priced at $447 for a three-pack.

The 2GB Jaz drive, delayed by additional product reliability testing, originally was supposed to ship last quarter. It will be available in early March.

Priced at $199, the Buz allows users to capture, edit, and share videos, digital photos and sound using their PC. The product, designed for consumer use, digitizes video content by combining an ultra SCSI interface and hardware video compression.

Iomega, which has changed the face of the portable storage market with its Jaz and Zip drives, is facing increased competition. Yesterday, French disk maker Nomai scored a major victory in its battle with Iomega when a U.S. district court lifted a temporary restraining order that effectively prevented Nomai from selling its Zip-compatible disks in the United States. (See related story) The ruling means that Iomega, for the first time, will face competition in the American marketplace for disks that work in its Zip drives.

But the company faces even more serious competition for its Jaz products from high density storage maker SyQuest, and from storage start-up Caslewood Systems, created by ousted SyQuest founder and CEO Syed Iftakar. Iomega's new drive will go head to head with Castlewood's upcoming 2GB Orb, due this quarter. And SyQuest offers both a 1.5GB SyJet and a 1GB Sparq.

Disktrend president Jim Porter praised the quality of Iomega's Jaz line, but said that the company was operating under a disadvantage because both the Castlewood and SyQuest products use only one disk, with two heads, in the cartridge. Iomega's Jaz products, by contrast, use two disks, with four heads.

"Heads are relatively expensive things," said Porter, "so the cost of Iomega's cartridge and drive is presumably going to be higher" than products from its competitors.

"And the No. 1 technical specification when it comes to these products is price," Porter added.