Iomega keeps it small

The storage maker beefs up its focus on providing solutions for the consumer and small business markets.

SINGAPORE--Data storage vendor Iomega is keeping its focus firmly on the consumer and small office/home office market, choosing to stay out of the fight in the high-end arena.

Werner T. Heid, Iomega's president and CEO, told the media during a recent visit to Singapore that the company has no ambition to compete against enterprise storage providers such as EMC and Veritas Software.

Sales from consumer products contribute 60 percent of the company's overall revenues, of which 80 percent are from businesses with fewer than 50 employees, Heid said.

"We're very comfortable in the market space where we are now," he said. "There are millions of consumers and Sohos/small and medium-sized businesses (SMBs)...a lot of opportunities here." Today, there are 7.8 million businesses with fewer than 100 employees in the United States alone, 90 percent of which have 50 employees and below, he noted.

Iomega is ramping up its plans in 2005 to capture more of these markets worldwide, focusing its efforts on recruiting value-added resellers, systems integrators and original equipment manufacturers. It is looking for partners with solutions targeted at Soho (small office/home office) and SMB segments, as well as vertical markets, Heid said.

The company is also banking on its REV product family to gain inroads into the market. REV (removable rigid disk technology) drives provide removable storage with hard disk performance of up to eight times faster than tape, the company claims.

Since its launch in April last year, these drives have garnered over US$30 million in revenues for the company. More than 80 percent of these drives are used by businesses, Heid said.

While the company now seems to be heading for better fortunes with its REV products, it was barely six months ago that Iomega was facing a tough time in the market.

In September 2004, the company reduced its workforce by 25 percent. It also ceased development of its digital capture technology (DCT), a storage platform for matchbook-size consumer electronics devices which it launched in January last year.

"The restructuring was carried out based on the fact that we had two technologies--REV and DCT," Heid said. "We are not a big company, so it's hard to do two technologies."

DCT, he claimed, is "a consumer technology" that can only be successful if it is embedded in products such as digital and video cameras, PDAs, audio players and televisions. But the manufacturers of such products are willing to do so only if total commitment was given to the development of DCT, he added.

"We looked at the growth in the market and decided to focus on providing for home and SMB networks. We saw the potential in REV," he said, explaining Iomega's decision to drop DCT and focus its resources on developing the company's REV technology and business.

"By abandoning a second technology, we reduced a lot of cost in operations and increased our efficiencies." Iomega has however managed to license DCT to a "major consumer electronics company", he noted, but declined to reveal the name of this licensee.