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Attacks fail to trip up Iomega’s Zip

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Iomega Corp. has a great big bull's-eye on its behind.

That's the way it must look to a lot of other technology companies.Hewlett Packard, Fujitsu, Imation, Seagate, Matsushita and Syquest are all taking aim at the Roy, Utah, company. Each wants to crack Iomega's hold on the personal storage market.

One strategy: Rip the company's products in advertisements. Here's a sampling of excerpts from ads that have appeared recently attacking Iomega.

- "Unlike the Zip drive, the LS-120 drive is compatible with standard 3.5-inch disks. So you only need one drive." -Ad for Imation's LS-120 drive.

- "Store your personal and business records on high-quality, reliable CDs. Unlike any zippy new formats, the CDs you create can be shared with millions of CD-ROM and stereo CD players worldwide." -Ad for the HP SureStore CD-Writer Plus.

- "Is this Jaz or the hustle? Once you get past the cute name and trendy packaging, the only thing Jaz users have left is a thinner wallet." -Ad for Fujitsu's DynaMO 640 drive.

Owwie.

That's what happens when you're No. 1. Everybody else despises you.

Iomega reinvented the personal storage device industry four years ago this month. That's when the company hired Kim Edwards as CEO.

Edwards didn't mince words in his job interview. He said right out that the company's then-star storage product, the Bernoulli box, was a dog.

"It was too expensive, too difficult to use, too big, too heavy, too everything bad," Edwards once told me.

So Iomega got hip. It came out with the Ditto, then the Zip and finally the Jaz drives.

All are snazzy-looking products paired with sizzling marketing campaigns that make owning an Iomega drive seem as cool as owning a Lexus.

Iomega announced in late December that it has shipped 11 million Zip units since introducing the drive in March 1995.

Its campaign to declare the floppy disk dead and make the Zip ubiquitous has been widely successful. Zip drives are standard on many computers now. That success shows up on the company's bottom line: Iomega passed the $1 billion revenue mark in September.

Now that there is a thriving storage device industry, every one is looking for a "Zip killer," as Todd Bakar, an analyst at Hambrecht & Quist puts it.

So what to make of the anti-Iomega ads? Are CD-ROM drives that you can record and rewrite on a real threat to Iomega's kingdom? No, says Joseph Besecker, president of Emerald Research. Rewritable CD-ROM drives are too expensive to compete with the Zip drive and will remain so for "quite some time." Bakar says the drives' performance is still an issue.

How about the LS-120 and other Zip imitations? Imation, Besecker says, has fumbled its attempts to steer consumers away from Iomega. He sees a battle for the laptop market, and for Iomega to win there, too.

"On the Zip front, I don't see any one making inroads," he said.

Other industry watchers are plugging Imation's LS-120, though. In a head-to-head comparison, Family PC magazine found the Imation disk drive was faster than the Zip drive. And it works with regular floppy disks, too.

The Imation SuperDisk also is beefier. A SuperDisk holds 120 megabytes of data, compared to the Zip's 100 megabytes.

But none of these companies seems able to market their products with enough pizazz to capture consumers' attention.

Iomega's consumer base, tremendous brand name recognition and its broad array of relationships with manufacturers stymie the competition, Bakar said.

If Iomega has an Achilles' heel it may be its Jaz drive. The company said Dec. 18 that has delayed shipments of the new Jaz drive because of quality concerns. The updated Jaz drive will be up to 40 percent faster and have twice the storage capacity of the current model.

It is now expected to be available later this quarter. It's the second bit of bad news for the Jaz drive. Last April Iomega recalled some Jaz cartridges because of quality problems.

Jaz, Besecker admits, is more vulnerable. Iomega has less experience and expertise with removable hard drive products.

Besecker says he's keeping an eye on Syquest, which "could hurt" Iomega.

Syquest's new Quest drive packs 4.7 gigabytes of storage capacity - enough to capture, edit and play back a full-length feature movie. It's aimed at audio, video and multimedia markets, just like the Jaz drive.

Still, he thinks Iomega may be able to hold its position with pricing. And, of course, clever marketing.

So, despite ads to the contrary, it looks like Iomega can keep whistling Zip-A-Dee Doo-Dah.