Iomega Corporation Data Storage

The purpose of this report is to examine the Iomega lot, based in Roy, Utah, for the BA 201 Survey of Business course at Birmingham-S out(p)hern College. The come with manufactures computer storage devices the dynamismTM and JazTM pay backs, the Clik storehouse device, and the BuzTM audio and video drive. 1The guide supplier of data storage devices in Europe, and the third largest supplier in the world, Iomega has now strengthened its line of products with the ditto mark tape backup device.2 The industrys enthusiasm and familiar satisfaction with which these products were received is unprecedented in the computer industry, making Iomega an innovator among innovators.This report testament discuss the following components of the Iomega CorporationHistory of the corporation and its productsMarketing strategies and product offeringsIomega was founded in 1980 with its flagship removable storage device, the Bernoulli drive. Though its original efforts are now more(prenominal) th an antiquated, Bernoulli Optical Systems remains a subsidiary of Iomega. In 1983 Iomega was made public, and for the next twelve stratums, the smart set would see a period of experimentation and growth. While Iomega remained lav the major industry names of Apple and IBM, the late eighties and early nineties were integral to Iomegas current success. The technical bases for the dynamism and Jaz drives were built upon, leading to these products 1995 release.2Public response to the release of the man-portable data storage devices was enormous. Orders clogged the production component of Iomega before the records were even released to the public, and by April 1996, barely one year after its introduction, Sony Pictures Entertainment entered into an exclusive agreement with Iomega for use of its Jaz disks.3 June of that same year would bring even greater response Iomega entered into merchandising agreements with IBM, NEC Technologies, Gateway, and Unisys.4 By the lay off of the summe r of 1996, Iomega had formed fibernerships with every major computer manufacturer in the United States.The media frenzy surrounding the release of the drives was further fueled by honors awarded by computing magazines PC Computing and Gadget Guru. The Jaz drive was named 1996s Innovation of the Year and Most Valuable Product by PC. Gadget Guru named the Jaz drive the stovepipe Computer Accessory of 1996. These and early(a) accolades pushed public familiarity of Iomega products higher and higher, boosting production and sales.5In response to this domestic success, Iomega began a complete expansion of its foreign production and marketing in early 1997. European headquarters were set up in both the Netherlands and Switzerland, and their production internet site in Malaysia was expanded and modified. While the base of the union remained in Roy, Utah, Iomegas presence in both Europe and Asia was fortified with a larger number of production jobs for Asians and Europeans. Coupled wi th a greater preoccupancy of foreign marketing and advertising, Iomega emerged as the third largest producer of data storage devices in the world.6The end of the 1996 fiscal year showed a 272% increase in receipts from the previous year.7 The introduction of the Jaz and secure drives in 1995 was undoubtedly responsible for this success, which was followed in 1997 by new partnerships with Motorola, Apple, Kinkos, and Hewlett Packard.4 By June of 1997, Iomegas Zip drive shipments reached six zillion it was then a standard in new Sony personal computers, Micron notebook computers, and in all Kinkos store computers nationwide.8The success of the Iomega drives remained rampant when the bon ton announced the introduction of the Buz multimedia producer in late 1997. The Buz producer would allow consumers to capture movies, music, and photographs on their personal computers. While the success of the Buz drive in time remains far behind that of the Zip and Jaz drives, this diversificat ion allowed the company to remain on the cutting edge of computer technology. The Jaz drive was marketed as a accompany piece to the Buz drive, lightly forcing consumers to purchase two products with one goal in mind.9 The approach was successful, leading to 1997 fiscal year earnings of 77%.10May 1998, in the wake of the Buz release, brought about another important computer modernization, the Clik drive. The Clik drive revolutionized methods by which consumers could store digital information from handheld video cameras, computers, and cameras.11 Marketed with special Clik disks, the drive itself brought the portable storage efforts of Iomega full circle, now having storage products for virtually every major computer product on the market.Iomega advertises in many different places. The web site www.iomega.com provides a simple way to find out about the company. It provides potential customers with many different sections geared towards answering their questions about Iomega and its products. The site allows potential customers the fortune to gather information through press releases and news articles related to the company, and gives customers a chance to win free products in contests. More importantly, Iomegas web site allows customers the opportunity to order its products online via a virtual shopping mall. Customers can receive Iomegas products without ever stepping foot outside their front door.Iomega also advertises its products through other companies. Having Iomega Zip drives already installed in computers, such as Apple, Dell, and Gateway, allows customers the option of buying a Zip drive already installed in a computer of a well-established personal computer (PC) manufacturer. About 40% of Dell computers already project Iomega Zip drives installed in them.Due to all of the positive responses Iomega has received from forming partnerships with these PC manufacturers, it has intractable to form a new partnership with Fujifilm. Fuji Photo Film Company Ltd. has recently started marketing branded Clik disks. Fuji already markets Fujifilm branded Zip drives and has now signed with the forty megabyte Clik disks. Said Steven A. Solomon, senior vice president of Fuji Photo Film USA, Inc., Weve had great success branding Iomegas normal Zip disks and we believe that we will have similar success with Clik disks. 12Iomega offers customers a way to store large amounts of information on disks rather than salve them on the hard drive of their computer. The company offers 100MB Zip USB and now the new 250MB Zip drives. This option benefits both businesses and personal computer owners. Businesses profit from owning a Zip drive due to the convenience of saving large presentations or proposals on a disk and then abideing it to different places for personal computer owners, the Zip drive allows everyone in the house to have their own disk, keeping childrens games separate from parents finances. The notebook Zip gives people with digital compute rs the ability to carry large amounts of information with them in a slim, low power design for easier storage and transportation.Iomega recently lowered the price on their external Zip 100MB small computer system interface and their 100MB Zip USB the new prices are $99.95 and $129.95, respectively. Reducing the prices was driven by the products universal adoption by the users of more than twenty-two million Zip drives, said David J. Henry, vice-president and general manager of Zip/Jaz management at Iomega Corporation. 14 By lowering the price of the product, Iomega makes their products more affordable for their customers, attracting more potential buyers.Iomega Corporation announced in January 1999 that it is restructuring in hopes of increasing gross profit figures for the upcoming fiscal year. Although Iomega controls over 86% of the removable storage market, its gross profits have decreased to levels that have made public investors somewhat weary. Previously, Iomegas structure wa s that of three decentralized product units which included the Professional Products, Personal terminal, and Mobile Storage divisions.The new structure will focus on eight business functions that include sales and marketing, product development, manufacturing and operations, corporate marketing, finance, legal, human resources, and corporate development and strategy. In addition, take in management created a new functional group known as customer service and development which combines the existing customer service governing body with a new group of applications engineers.15 Iomega hopes that these changes will ease the rise-fall-and-rise-a turn a profit impression that the company has acquired since its entry into the removable storage market in 1980, thus spurring amend gross profits, consumer confidence, and an increased interest on Wall Street.16In 1983, Iomega was on top of the Wall Street world. The searing property raised $21.7 million in public offerings due to the intere st drawn by IBM PC users who were amazed by Iomegas patented Bernoulli Box technology. The Bernoulli Box used a subsystem with stand-alone disk drives that rest beneath the monitor and provide unlimited data storage capability with removable cartridges. After several years of prosperity, the bottom fell out in 1986 and 1987 when computer makers began including relatively large storage hard drives as a standard part of the home PC. Demand for the Bernoulli Box technology waned, and Iomega go through hard times that included an $8.5 million bank debt and enormous inventories.Michael Kucha took the reins as chief executive officer (CEO) and immediately made an impact on the try company. Kucha cut costs by trimming the workforce from 1,350 to 750 as well as utilizing substantial tax write-offs. In less then a year, Kucha helped Iomega gain an $18 million cash balance, cut the bank debt to zero, and slashed inventory by 50%.16 More importantly, Kucha stressed research and development d uring his leadership reign. The company was able to adapt its Bernoulli Box product for the Apple Macintosh computers and began benefiting from the increased demand for the Macintosh in the late 1980s and early 1990s.After a few years of slightly above average success, 1993 proved to be a disastrous year for Iomega. CEO Fred Wenniger, who replaced Kucha in 1989, departed due to shoplifting margins and increased competition. The removable storage market had recently been flooded with Iomega clones that caused prices to decline, thus increasing competition. Analysts wondered if the company would survive the year.17 Leon Staciokas was named acting CEO as the company restructured during 1993 and 1994.In January 1994, Staciokas advocated a staff cut in hopes of reducing overhead expenses and freeing up extra cash. Eight percent of salaried positions were cut as part of the corporate wide restructuring.18 Later in the year, Kim Edwards replaced Staciokas and became permanent CEO of Iomega . Edwards first task was freeing up more money to invest in modify and improving technology. In July, Iomega cut 100 salaried jobs in a bold management move that would free up $4 million in overhead annually.19Edwards new management approach towards Iomega eventually transformed the company from a struggling business into the most successful removable storage manufacturer in the world. This approach was based on the idea of creating a product that the public would buy and use rather than simply admire. After meeting with top management and technical advisors in the early months of 1995, Edwards was able to lay the groundwork for the release of Iomegas new Zip drive that would revolutionize the industry and bushel the company as a major player in removable storage software. The creation and release of the Zip drive in late 1995, as well as wise financial management by Edwards, helped to increase Iomegas operating budget from $141 million in 1995 to just over $1.2 one thousand thou sand in 1997. 20Unfortunately, Iomega encountered more problems in late 1997 and early 1998. Edwards believed that opening a new product engineering and manufacturing plant in Milipitas, California, would yield greater productivity and allow for quicker response time to customer demands for new technology.21 And it did. However, in July 1998, Iomega acquired Nomai, another removable storage manufacturer, in hopes of shrinking competition and placing the company squarely in front of all competitors. This bold move hurt Iomegas finances and caused a significant increase in operating expenses when opposite with the upkeep of a brand new factory. This poor management decision by Edwards cost him his job. 22Presently, Jodie Glore serves as president and CEO of Iomega. Mr. Glore is the permanent second-stringer for Kim Edwards after James Sierk served a brief stint as interim CEO. Glore hopes to reorganize and restructure Iomega he wants to focus on the areas that the company has been c riticized for in the olden such as customer service and unsatisfactory product performance. Glore has already taken steps to alleviate these problems by ordering internal restructuring that will slide by the previous system. The new system of eight business functions is a more elaborate, yet organized hierarchy. Glore hopes that it will allow a quicker response to customers, placing their ask as a top priority.15