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After an 11-year holdout, Iomega agrees to a buyout

By Scott M. Fulton, III, BetaNews

April 9, 2008, 1:26 PM

It's the end of another great technology brand that came to light, shot like a comet, and then started blinking out all during the 1990s. Iomega held out as long as it could, and in the end, a nearly quarter-billion-dollar buyout may not be all that bad.

When my ten-year-old daughter asked me the other day why there was no "A" or "B" drive on any PC she had ever used, I gave her the short and sweet answer that the older drives that used to have those letters are now too small to be significant. The real answer, of course, was Iomega.

The company that struck the first -- and many believe, the fatal -- blow to the floppy diskette as a technology critical to the operation of the PC, succumbed this morning to a very long battle for independence, this time against an offer from storage manufacturer EMC that Iomega's shareholders finally could not resist: a $213 million tender offer, worth $3.85 per share. Iomega stock was trading early this afternoon on the New York Stock Exchange at $3.80, though it had reached $5.64 as recently as last September.

But there was a day long ago when the decimal point was kicked pretty far to the right. In the latter half of the 1990s, Iomega was one of the premiere brands in new consumer technology, offering the first stand-alone, portable data storage devices with sizes that were proportionate to the work people were doing at the time: 100 MB and above. Some believe the Iomega Zip drive, from the perspective of a marketing campaign, was the precursor to the Apple iPod -- an example of how to package and price something right.

It didn't just kick the floppy disk out of existence, it obliterated it. When Zip was first introduced, so-called "superdisks" were being tested that stored as many as 100 MB in a traditional 3.5" floppy form factor. But they required expensive built-in drives that weren't always compatible, it turned out, with all standard 1.44 MB disks, especially the ones that used copy protection -- and before CD-ROMs took off, those disks were the principal means of installing software.

The fact that a consumer could reliably carry 100 MB of storage with him with an investment of $200 or less, meant the floppy disk became unnecessary outside of software installation. In just the first year of its introduction, businesses that had yet to discover the joys of going online, let alone launching their own Web sites, actually shuttled important documents between offices by shipping Zip disks overnight by FedEx or courier, leading to major changes in the way shipping services used X-rays to scan packages.

Major corporations -- especially publishers -- were purchasing Zip drives for their employees not only to expedite the way they shipped files around, but also to postpone the inevitable time when they would have to purchase entire laptop computers for them.

A company that new doing something that successful as well as it did, could only mean one thing...at least to analysts: It's a startup that's ripe for a takeover. The year was 1997, and the original bidder was Hewlett-Packard, in a proxy war that lasted for years thereafter, and which drove Iomega's share price as high as $140 per share, according to MarketWatch's Herb Greenberg.

But along with the increased scrutiny came magnified skepticism whenever the company made missteps. First, a new series of Zip drives came with a massive amount of bloatware that consumers didn't want. Next, there were innumerable driver problems, especially as Microsoft moved to Windows 98.

And then came the problem whose moniker came to be irrevocably associated with the company brand: the dreaded "Click of Death." Beginning in 1998, Zip drive users noted a mysterious sound emerging from their units, not unlike a hamster hiccupping in a plastic box. That sound would inevitably be accompanied (as I myself witnessed on countless occasions) by drives that were inoperable, and disks that were used in those inoperable drives that were unreadable by any other Zip drive.

How Iomega handled that major bug would eventually sign its death warrant: For a time, it denied the problem's very existence. Then when it started addressing the problem in the manufacturing process, it was already way too late. The CD-R era was upon us, and the DVD-R era was just around the corner. Iomega found itself shipping portable hard disks, but it was no longer in a league of its own, competing with giants Seagate and Western Digital.

The Iomega brand will apparently live on, however, as the consumer division of EMC. Iomega CEO Jonathan Huberman will be in charge of EMC's new division, though one of its main jobs, the acquiring company stated this morning, will be to market its existing line of consumer-focused storage software products. Iomega is treating the buyout today as the turn of a chapter of its corporate history, though it's difficult now -- especially in light of where Iomega has been -- not to perceive that chapter as merely an appendix.

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By sumone

posted Apr 10, 2008 - 11:40 PM

From a rewritable perspective, ZIP drives were better than CDs/DVDs. The optical RW format is very unreliable for repeated erase-and-write. Until, flash memory made it big, there was a lacking solution in the industry,

Score: 0

By Zebets

edited Apr 11, 2008 - 10:16 AM

I've actually been using the same CD-RW for about seven years now. It came with my first drive and is the only one I've ever had but I've written, rewritten, erased, etc countless times and never had any problem with it at all. The design on the top is actually starting to wear from handing it so much. I guess I got a good one. :D

From what I've heard about zip disks they can die in an instant, and trash your drive along with itself just for fun.

Score: 0

By PC_Tool

posted Apr 11, 2008 - 11:13 AM

I've actually been using the same CD-RW for about seven years now. It came with my first drive and is the only one I've ever had but I've written, rewritten, erased, etc countless times and never had any problem with it at all. The design on the top is actually starting to wear from handing it so much. I guess I got a good one. :D

Damn. That is awesome. I can't seem to get one to last more than a week or so. Haven't bought an RW for over a year now because of it. Ran into a series of burns where it would seem to work, I could read it form another PC and a few days later, even if it had been sitting there unused, no drive could find any data on 'em.

I hate frustration, so I tossed 'em. Using flash and CD-R's now. I have much better luck with those. *shrug*

Score: 0

By Zebets

edited Apr 11, 2008 - 1:35 PM

It's an LG branded 650MB 8X disc with blue dye. I don't know which company actually made it but it's certainly lasted longer than I ever expected.

As for CD-R I've had good luck with some, not so good with others. I have some of the first discs I ever burned, still perfectly readable. Then some others have faded or started rotting and become unreadable after a year.

I hardly ever use CD-R anymore though, just for music mostly. I've been using DVD-R and DVD-RAM for several years and have never had one go bad yet. I think having a good drive and burning at slower speeds helps more than anything. I just wish BD-R would hurry up and become more affordable. :D

Score: 0

By ir0nw0lf

posted Apr 10, 2008 - 10:44 AM

Back in their heyday, ZIP drives were awesome. That is until the CoD issues. We had numerous companies that used them for backups and they were ideal for accounting -- they held more than enough storage and were fairly rugged, perfect for backing up and taking to ye ole accountant. These days, a USB thumbdrive gets the same job done.

Score: 0

By Zebets

edited Apr 10, 2008 - 5:08 PM

I think their biggest problem was that the disks were just stupidly expensive. Like $10 for a 100MB disk when you could buy 700MB CDs for pennies.

Score: 0

By Brett.Diamond

edited Apr 10, 2008 - 8:43 AM

Another problem was the IOMEGA's next version of the Zip drive, the Jazz drive, was incompatible with Zip disks. Since they could not leverage their customers' investment in Zip-based technology their customers could choose other solutions with no impact on their part, and CD-R, although smaller, was compatible with CD technology. One of the reasons DVDs have gained popularity (to the point of replacing CDs in many applications, such as software distribution and data backup) was that a DVD drive is compatible with CDs, so replacing a CD drive with a DVD drive does not inconvenience the customer; likewise, replacing a CD burner with a DVD burner does not remove any of the end-user's abilities. Of course, DVD-R is incompatible with DVD+R, but that is cross-compatibility, not backward compatibility.

Score: 0

By shicaca

posted Apr 10, 2008 - 8:33 AM

It's really too bad that Iomega couldn't have kept their prices a bit more manageable. I honestly was in love with my zip drive. I thought their storage media, while some say slightly bit bulky, was freaking cool as hell. The little crystal that made it write protect, being able to encrypt your data, fitting a ton more than I could on my floppy, and not having to worry about scratching the damned thing like I would a CD.

I honestly think that if they had a nice capacity with the same zip-style sized disk, and made everything nicely priced, I would have considered one of their drives again.

My problem with the whole company was not the click of death, but the "I just started my computer with my INTERNAL drive and the computer doesn't recognize it until I reboot about four times" problem. Of course this was many a years ago, now. Two computers ago, actually. I ended up taking it out and tossing it. Shame, really. (specially since I spent like $32 on disks that I never really used b/c I had gotten into CD-R/RW's)

Score: 0

By DonGato

posted Apr 10, 2008 - 1:12 AM

Iomega could have been greater than it was. They didn't license their technology until quite late and then the click of death hit them and their denial combined with the relatively high price for the technology becoming quickly old was the definite blow.

They kept trying by doing CD-R units, portable disks and the likes but even their new Zip-like units named REV are really bad. I've used 3 of those with really bad results. They don't have anything of quality and innovative.

I would like them to be death already. They had a really good product when they started but their pride didn't allow them to license the manufacturing. That really drove most of us nuts and I think because of that lack of business expertise they should be out of the market already.

Score: 0

By Hollywood__

posted Apr 10, 2008 - 12:54 AM

11 year hold out, LMAO!

Score: 0

By cousinkix1953

posted Apr 10, 2008 - 12:37 AM

"WHY on earth would you buy I-omega now? The world has forgotten the zip drive long ago..."

My IOMEGA 200kb ZIP Drive is on the shelf with some older 3 1/2 inch floppy drives. Don't have much use for them any more. Most of those formatting disks are on CDs now and you can buy a bootable OS disk, which beats the hell out of using 6 floppies to install Windows XP on a hard drive...

Score: 0

By AvantAge

edited Apr 9, 2008 - 9:58 PM

The death of floppies really had more to do with capacity limitations, the ever increasing # of bits that modern programs and their data containers take up, and the terrible (horrible) fragility of the floppy physical medium.

Those of you who remember 5.25 (or how about 8") floppies likely rejoiced when the first 'not so floppy' single density 3.25 disks came out. The hard casing made flippies much more durable. Yes, I just said 3.25 floppy & durable in the same sentence. Can you imagine if by some stroke evil of satan's hand floppies evolved to use technology akin to hard disks perpendicular read/write methods? Errant flatuence would take one out. The higher the bit/area ratio, the more vulnerable the data - on any non-solid state based technology (to a degree).

Ultimately, all non-solid state mediums will go by the wayside due to their fragility, the need for the least volatile as possible storage medium, and the ever increasing (or decreasing) micronization of all things digital.

All that being said, I think lossless analog stream processing & storage, possibly via quantum/photonic mechanisms will supplant all of this onesy twosy based hardware we have. Analog is infinite, digital is a bit below that. ;^)

-Adam

/Lecture=Off

Score: 0

By PC_Tool

posted Apr 10, 2008 - 8:49 AM

digital is a bit below that.

But just one bit. ;)

Score: 0

By the artist

posted Apr 9, 2008 - 5:54 PM

WHY on earth would you buy I-omega now? The world has forgotten the zip drive long ago... and the aren't manufacturing any significant product (thus the price i guess)... are they?

Score: 0

By Ryusennin

posted Apr 9, 2008 - 5:27 PM

I still have my SyQuest EZ around, which was the loosing competitor of the Iomega Zip. I never really used it though, simply because I thought it had way too much space for a floppy replacement (100~125 MB) yet not space enough as a storage medium.

Ultimately, I switched to the Iomega Jaz which was very versatile and with lots of room to spare, something in between the CD-R and the yet-to-be-invented DVD-R (at a time when CD-RW costed an arm and a leg).

Score: 0

By psycros

posted Apr 9, 2008 - 4:27 PM

Zip had one big advantage over CD-R: you never had to worry if your Zip disk would work in someone else's drive (assuming they were both first generation units).

Score: 0

By DonGato

posted Apr 10, 2008 - 1:16 AM

Even while it's true I had major problems with ZIP units. Not being read in other drives and losing all its contents. And that happened to lot of people I know.

Most of us have a ZIP drive stored in the old technology bin. :P

It wasn't a media you can trust as a CD-R. Granted at that time CD-R units had a lot of compatibility problems and where quite expensive (so few people had them).

Score: 0

By Ian C.

posted Apr 9, 2008 - 9:41 PM

Other people had zip drives. Only ever knew a single person who owned one, and I know tons of computer geeks. Saw plenty of them around in computer labs though.

Score: 0

By PC_Tool

posted Apr 9, 2008 - 2:01 PM

???

The final blow to floppy drives?

Uh...that'd be the CD.

At the time IOMEGA was in it's prime I worked for a company called Micron. I was part of the technical support/support/product support team in Minnesota. We had *one* of these things...and no-one used it.

Sure, we sold a bunch...to people who didn't have a clue what they were.

I know, I know...they were huge. The floppy would have died with or without them. CD, CD/R, and CD/RW took care of that.

Score: 0

By BrokenHALO

posted Apr 9, 2008 - 2:10 PM

Iomega I think gave the FIRST blow to floppy drives.

SECOND would be the CD.

And the KNOCKOUT blow is easily the USB Flash Drive.

Score: 0

By PC_Tool

posted Apr 9, 2008 - 3:13 PM

You're on top o' the heap, so you get the reply.

Agreed. To a point. Actually, one point:

Software installs.

These replaced the floppy by switching to disc media. The moment they switch to flash media, I'll agree. :)

Until CD/DVD Floppy was pretty much the only way to get and install software. The CD/DVD replaced it. Flash has yet to do so. :)

Score: 0

By Zebets

posted Apr 9, 2008 - 9:34 PM

The web has already replaced physical media for software installs so it doesn't matter.

Score: 0

By PC_Tool

posted Apr 10, 2008 - 8:46 AM

The web replaced software installs?

Really?

Software Etc., Best Buy, and others might disagree with that.

The web has replaced certain software installs. Software that can be quickly and easily downloaded, the rest, large commercial software, games, etc..are still CD/DVD, and will likely remain so.

As has been stated in many previous threads by many others, we like our physical media, packaging, and all that jazz.

Score: 0

By Zebets

posted Apr 10, 2008 - 9:40 AM

Aside from Windows I don't have a single piece of software loaded from a disc. OpenOffice, every one of my media programs, utilties, every single program on my computer was downloaded. Every game I have bought in the last few years has also been downloaded, look at Steam. That is the future, not boxes off a shelf. Who buys software at a store anymore?

Score: 0

By PC_Tool

posted Apr 10, 2008 - 12:40 PM

Who buys software at a store anymore?

...

You're not asking that question seriously...are you?

Score: 0

By Zebets

edited Apr 10, 2008 - 7:17 PM

You're not seriously suggesting that web downloads are not replacing disc based software are you? In any case this all started because you claimed that USB flash drives would not replace discs until software started being shipped on them. Well that isn't going to happen for several reasons, not to mention it would be dumb.

For one thing it wouldn't be cost effective. They're too expensive compared to plastic discs. Second as I've said it doesn't matter, the future is web delivery. I gave you a really good example with Steam, look how many game publishers are now using it. Microsoft and other companies are moving towards web applications. Shrink wrapped software is going the way of the dinosaur.

Score: 0

By PC_Tool

posted Apr 11, 2008 - 9:03 AM

It's a billion dollar industry.

Like I said:

Software Etc., Best Buy, and others might disagree with that.

No big. Regardless.

Score: 0

By Zebets

edited Apr 11, 2008 - 10:19 AM

Compare it to what it was a few years ago and get back to me. Shelf space for packaged software shrinks more every year. CDs are still a billion dollar industry too, but they are also being replaced by online music stores.

Score: 0

By PC_Tool

edited Apr 11, 2008 - 11:10 AM

Look at any pic of the software section of BestBuy from 2003 and now.

They look almost exactly the same.

I still hate having to navigate that maze to get to the department I actually went there for.

Regardless, we're going to disagree, and that's that. Hell, the software dept. at our local MicroCenter is actually growing. (about 6 months ago it was 2 isles, last weekend it was 4.)

I don't think CD/DVD is going anywhere (CD might, DVD won't), it's too big of an industry. That's my opinion, anyway. You are entitled to yours, even if it differs and I think yer nuts for it. :p

Score: 0

By Zebets

edited Apr 11, 2008 - 1:33 PM

I really think they'll be replaced, maybe not completely but with Microsoft pushing software as services, more and more publishers selling online they're days are probably numbered. People probably thought nothing would ever replace floppy disks for software distribution too at one time. After once having to install Windows 98 on a laptop from like 30 floppies the end for them was clear. :D

It's just so much more convenient too. I can log into Steam and download all of my games no matter where I am, and the ability to play them without putting in discs is really nice.

Score: 0

By wincement

posted Apr 9, 2008 - 8:25 PM

Flash has yet to do so

...and it never will. Internet downloads will eventually replace all physical media for software delivery.

Score: 0

By Zebets

posted Apr 10, 2008 - 5:05 PM

Exactly.

Score: 0

By PC_Tool

posted Apr 10, 2008 - 8:47 AM

Internet downloads will eventually replace all physical media for software delivery.

I strongly disagree. See above.

Score: 0

By Zebets

edited Apr 9, 2008 - 2:09 PM

Actually USB thumb drives were the final blow to floppies. CDRs were too bulky to carry around, required an expensive writer and special software and were in no way near as user friendly.

Score: 0

By bourgeoisdude

posted Apr 9, 2008 - 2:10 PM

Yeah, CD's were a major blow but thumb drives were probably the final blow. I'd have to agree.

Score: 0

By PC_Tool

posted Apr 9, 2008 - 3:15 PM

Maybe the "FINISH HIM!" move. :p

But floppy was a goner before flash became popular. Most of the non-computer literate I know still have no idea what a flash drive is.

Score: 0

By wincement

edited Apr 9, 2008 - 8:30 PM

Heh. Yeah. I get puzzled looks sometimes when I say "flash drive." And then I say "thumb drive."

"Ooooohhhh..."

Score: 0

By PC_Tool

posted Apr 10, 2008 - 8:43 AM

I usually call them zip drives. At least then there's a flicker of recognition in there somewhere...behind all those fantasy football scores and beer-goggle mishaps.

Score: 0

By Zebets

edited Apr 10, 2008 - 5:19 PM

Calling flash drives zip drives is like calling CDs 8-tracks.

Score: 0

By PC_Tool

posted Apr 11, 2008 - 9:04 AM

No s***?

Ya think?

Perhaps that's why they seem to show a glimmer of recognition. Once that hits, I can tell them the difference. Just saying Flash drive makes them glaze over and that's a bit harder to come back from.

Score: 0

By Zebets

edited Apr 11, 2008 - 10:13 AM

Wow if they glaze over at the term flash drive but still remember what a zip drive is, I'm glad I don't have to deal with them. Wouldn't it make more sense to say floppy disk, I'm sure a lot more people know what those are than zip drives.

Score: 0

By PC_Tool

posted Apr 11, 2008 - 11:11 AM

Probably, but floppy disks you put into a drive inside the PC. For the most part, zip drives, as flash drives, were external (Yes, they had internal versions, but those were even harder to find than the external one's).

Score: 0

By Zebets

posted Apr 11, 2008 - 1:30 PM

I've only seen the internal kind, though I've heard about how horrible the old parallel versions were.

Score: 0

By BrokenHALO

posted Apr 9, 2008 - 2:11 PM

We all posted at the same time....

Yea I third the Final Blow Award to the USB flash drive.

Score: 0

By Zebets

posted Apr 9, 2008 - 1:36 PM

Iomega? Didn't they make parts for the UNIVAC or something?

Score: 0