I have Iomega on my mind. Anyone remember Iomega?
I still use the Iomega external hard disk drive I purchased a few years ago. It’s a horrible product. If I weren’t so lazy, I would’ve replaced it months ago. The adapter plug is designed poorly. I’ve had to do all sorts of things to prop up the casing to make sure that the drive powers on.
I’m probably one of the few customers who bought a HDD from Iomega, though. They’re known more for their zip drives. For marketers, they’re also known as the “it” storage company that drove straight while the road made a few turns (better optical drives and flash memory) that appeared like small jerks of the steering wheel than big turns. Now, any glance at Iomega’s product line makes them comes across as a small business storage provider.
Iomega became a powerful consumer brand over ten years ago. It had a reputation for being an innovator – maybe even a cool little company. A lot of consumers (including me) thought the Iomega brand was synonymous with big personal storage. They had great distribution. Somewhere between 1997 and 2007, Iomega just lost its innovation lead. More accurately, they had their lead ripped away from them. They got dragged down from their once envied position at the top of consumer storage – at least from a mindshare perspective. Once they hit the bottom, Iomega started to be all things to all people. I’ve always said that a brand is a promise repeatedly made and kept over a long period of time. As a customer, I don’t know what their brand represents anymore.
EMC made a tender offer to buy Iomega last month. They’ve extended the tender offer through this week. It seems like a smart move albeit with lots of execution assumptions and risks. EMC has been pretty vocal about investing more heavily in the SMB market. EMC doesn’t have the friendliest image in tech but they are certainly known as a smart (steely) execution-oriented company. This is, after all, the company that acquired VMware and (so far) making all the right moves. I hope I’m not jinxing them but EMC is as solid as VMware is hot right now. And, VMware is as hot as the sun.
Try this for good measure: At its 1Q2008 call, EMC reaffirmed its double digit revenue and profit growth for the remainder of this year. Why? Its growing across the board … international grew 21%, U.S. grew 14%, information infrastructure grew 12%, storage gained 12%, proserv grew 30%, security grew 13%, and oh yeah … that VMware stake doesn’t hurt. EMC is a giant company so these growth rates are even more remarkable given that context.
Here are some thoughts on what the Iomega acquisition will mean …
#1 – The acquiring company has a strategy and the acquisition is a step toward executing on that strategy. So, bye bye Iomega and hello EMC cloud storage and mobility.
#2 – The acquiring company looks at channel presence more than brand presence when drawing up lists for potential companies to gobble up. It does so because the bigger company usually has the larger brand firepower. It’s worth noting that there is a difference between brand awareness (positive or negative) and name recognition (indifferent). EMC has the former (albeit negative since they are known for high end, expensive, and complicated solutions) while Iomega has the latter. I think EMC recognizes this situation better than anyone. When shopping, it is normally correct to assume that the company doing the shopping is lacking products or distribution for a segment. Iomega products are average at best and … well, let’s leave it there. In this case, EMC lacks channel that Iomega does have … hence, the concern here isn’t what does or doesn’t happen to the Iomega brand (it will eventually go away) but whether EMC retains the strong channel with a compelling product.
#3 – Because of #1 and #2, I believe the hardest chores will be on product execution. They have lots of overlapping priorities now just in the SMB line. They really don’t have strong SMB offerings (more midrange commercial offerings) and they’re also glued to LifeLine OEM software. I think Iomega purchase will help but they’re going to have to make it possible to capture in customers and move them up. If you buy a company for its channel while knowing the brand is not strong (again, brand vs. name recognition) and products are not super competitive, you’ve got to make darn sure that you quickly get an innovative, competitive product out to that channel. Otherwise, your channel will flee by default and you’re left with the same set of challenges. I guess you’ve removed a competitor but I’d argue that removing a weak competitor doesn’t amount to much gain – it may even go counter grain.
And, this brings me back to my opening line. Regardless of what EMC does with Iomega, I know that the last thing they’ll pay attention to is some Iomega HDD customer wrestling with a recurring adapter debacle. So, despite my lazy reluctance to shop for a new external drive, I’ll have to go look for a new replacement soon. Maybe a product that doesn’t have an adapter that falls off when I shake my desk 0.001 millimeters. I forgive you Iomega. It’s all in the past now …
- John
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