In 2002 Iomega felt it was riding high. Customers were still buying Zip disks and drives and the company broadened its product line to offer CD and DVD players and writers, internal HDD and a range of NAS boxes offering up to 2TB of storage. It said its strategy was to 'bring enterprise-class networking storage solutions to the SMB market'. A Networked Storage Systems division was set up and the company waited for customers to buy its products.
Not enough of them did. In fact the Zip revenue declined faster as customers spent 57 per cent less cash on the products in 2003. Customers also pretty much ignored the mid-range and high-end NAS boxes, seeing them as 'me-too' and offering not a lot.
The competition in the CD/DVD player/writer space and the NAS box markets was strong and Iomega just didn't have good enough products to persuade customers to buy them.
The Networked Storage Systems part of the company is having an axe taken to its head count as the manufacturing of the unbought boxes stops. Iomega is pinning its hopes on its new Rev and DCT technology (see here and here); small form factor disk devices that offer Zip-class technology advances. They are promising but untried.
Competition here is strong with Toshiba just one of the suppliers offering small form factor drives.
A business like Iomega has to run faster to stand still because technology product life cycles are shrinking. We customers always want more for less and the intense competition in the storage market just keeps on delivering it.