Zip Drive Finds Integrator Backing

The federal market is giving Iomega's storage product a degree of energy, but competition is heating up fast

As a roster of new products begin heating up the storage marketplace, many of the industry's top integrators are boosting Iomega Corp.'s government market momentum.

The Zip drive, a book-sized portable storage device that uses a floppy disk with a capacity of 100 megabytes, is a runaway best-seller inside the federal marketplace, according to integrator executives.

Bob Dolan, director of federal marketing for Ameridata Corp., Stamford, Conn., said the federal market is now responding to Iomega's portable storage products with a degree of energy not seen with previous storage products.

"Tape drives have always sold well because of the backup needs of federal clients. With the new portable products like Zip, there's a perception that there's wider use for them. It's a comprehensive storage solution, rather than a mere backup solution," said Dolan.

But competitors are fast on the Roy, Utah-based company's heels. The storage developer felt last week just how hot the competition in the market can be when its stock tumbled sharply after a competitor announced plans to manufacturer a drive that many believe may eclipse the popularity of Iomega's Zip drive.

Still, Dolan praised Iomega for the marketing support it offers behind its products. The integrator executive said Iomega's new portable drives were added to Ameridata's GSA Schedule in 1995. He added that Iomega had not radically changed its marketing approach with respect to his company, but said they have been effective in generating a unique campaign for its newer products.

Jonathan Bazemore, product manager at BTG Technology Systems, said Iomega has aggressively increased its marketing activities with BTG since last year's introduction of the Zip. Iomega representatives exhibited with the company at trade shows.

Last year, Iomega reduced the number of its federal resellers from 10 to five, according to Iomega officials.

"We have pared down our resellers' program in an effort to provide a higher level of support to a few key partners. We had quite a few partners before the introduction of our portable drives. But paring down has allowed us to concentrate on a smaller group of players," said Iomega marketing manager Brad Billings.

For its part, Iomega provided support to four of the five partners during the FOSE exposition at the Washington Convention Center in April by putting up exhibits in each partner's FOSE booth, according to Billings. Billings said Iomega executives believe the government market strategy will enable the manufacturer to respond to its partners in a more timely and responsive fashion.

Robert Abraham, an analyst with the Santa Barbara, Calif.-based Freeman Associates Inc., said Iomega has attained a strong position in the overall portable mass storage market by generating considerable consumer awareness of its products and by employing an effective distribution system. However, the market is clearly in transition. The larger contest for Iomega is whether it can set the industry standard in the replacement of the 1.44 megabyte floppy disk drive, said Abraham.

"If Iomega can set the standard for the commercial market, the federal market would certainly follow," Abraham said.

Arguably, Iomega's closest direct competition among the portable mass storage products is SyQuest Technology Inc.'s EZ 135 disk drive. The EZ 135 hosts a 3.5-inch sized floppy disk with 135MB capacity. But SyQuest's newest product, the EZ 230, a disk drive hosting a 230 megabyte, 3.5-inch floppy, will prove a more formidable challenge to the Zip drive, predicts Steve Young, manager for Synergy Sales and Marketing, a Rockville, Md.-based company that distributes SyQuest disk drives.

Billings said Iomega's portable drives have become popular with law enforcement agencies because the drives can be easily secured while enabling federal employees to transport large files of sensitive data. Portable computer storage devices are becoming crucial to law enforcement agents as criminal investigations require that more evidence be gathered from computers.

"Our disk drives enable investigators to copy the contents of computer hard drives with a single floppy disk. This ability makes law enforcement agencies eager to purchase mass storage products," Billings said.

Meanwhile, BTG's Bazemore said an effective strategy for any computer storage product manufacturer has been to build faster and smaller storage products.

"There has been a lot of growth in the storage solutions market. Iomega has moved right along the direction of the market toward faster and smaller products. That's exactly what they've done, and it has strengthened our partnership with them," Bazemore said.

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