Iomega Sees CE Potential For Its Peerless Drive

NEW YORK— Despite Iomega's ongoing financial troubles, the company is forging ahead with plans to ink OEM and licensing deals with consumer electronic companies that could place its new Peerless removable hard drive in CE products by early 2002.

At PC Expo at the end of June, Iomega showed several prototypes that incorporated the Peerless drive system, including a personal video recorder and an in-car video system. Company executives said Iomega is holding talks with a wide range of CE and computer companies, but does not expect any products to include the Peerless before next year.

The Peerless system was originally envisioned as an office product when it debuted at Comdex last fall, but Iomega has expanded its potential horizon to include CE products.

"We want video to be a big part of Peerless," said David Hubbard, Iomega's general manager for Peerless, "and we want to get this incorporated into as many products as possible."

Peerless, is an external hard drive that comes in 10GB or 20GB capacities. The hard drive cartridge is placed in a docking station, connected by USB or IEEE 1394 port to a PC and appears on the PC as a logical drive.

While Hubbard would not say how many Peerless units Iomega expects to ship this year, he did expect the company to sell every unit it made.

Peerless has been only available at J&R Computer World in New York City, at Iomega's own online store and several catalog dealers, Hubbard said.

The product's primary roll out happened on July 4, when it hit CompUSA, Staples, OfficeMax and Fry's Electronics. Suggested pricing is $399 for the docking station and 20GB hard drive bundle. The hard drive cartridges also sell separately, with the 10GB carrying a $159 suggested retail price and the 20GB unit selling for $199.

Hubbard said Iomega's recent corporate maneuvers, which included closing its Roy, Utah, production facilities and laying off 110 factory workers, will not affect the company's plans for the Peerless. Prior to this move, the company had already shifted production of the Peerless to Malaysia, so it was not impacted.

Iomega's flagship Zip product's image received a much needed polishing at PC Expo. Michael Ludgate, the company's general manager of magnetic products, introduced a new host-powered USB version of the 100MB Zip. It will ship in August with a $99 suggested retail price.

The entire Zip category is undergoing a top to bottom revamp. Ludgate admitted that Iomega dropped the ball with its most famous product and is working to regain the faith of the consumer and improve faded relations with its OEM partners. The product itself may also get a facelift.

"We are really trying to re-energize the Zip line. People have sort of forgotten what to do with the Zip, so we have to re-educate them," Ludgate said.

Part of this education involves improving the in-store point of sale material explaining the benefits of Zip, particularly compared to its main competitor, CD-RW drives. Iomega is also expanding its retail base by following through on previously discussed plans to enter the mass merchant channel and other stores with non-supported sales floors, Ludgate said.

Iomega is looking at bundling opportunities with game software publishers to incorporate the company's Active Disk Technology into the games. Ludgate said there is a good chance the capacity of the Zip discs could be boosted past the current 250MB.

At PC Expo, Iomega unveiled the new software titles Journal and Filing Cabinet in its Active Disk line. The titles will ship Aug. 1 with a suggested retail price of $29.95 each.

File Cabinet allows the user to scan and organize documents, while Journal is a digital diary. Active Disk software, which comes on a 250MB Zip disk, does not download onto a PC, but remains on the disk. The company expects to ship two or three new titles per quarter.