EMC buys Iomega for $213M

April 10, 2008 | 14:58

Tags: #backup #buyout #emc #iomega #rev

Storage manufacturer EMC yesterday announced that it was to buy rival Iomega for $213 million, or $3.85 per share - a fair chunk of change, and a surprising valuation of a company that has been floundering for quite a while.

Iomega is a name that readers of a certain age will recognise as being behind the near-death of the floppy disk as a storage medium. The nineties saw the company producing the Iomega Zip drive which allowed people to store the equivalent of 74 3.5” disks on a single magnetic cartridge. Available for both IBM compatibles and Mac systems, for a long time the Zip was the ubiquitous 'sneakernet' accessory.

The company followed up its original success with the Zip 250, which increased the disks capacity from 100MB to 250MB while still retaining backwards compatibility. Coupled with the larger Jaz drives for backup, Iomega was the company that could do no wrong.

But then CD-Rs became the norm – cheap, disposable, and storing three times as much data as a Zip disk whilst being readable on any PC with a CD drive; people started to abandon the Zip drives that had served them so well. Iomega attempted to recapture its customer base with a 750MB unit – but the high cost and read-only compatibility with old 100MB and 250MB units meant it was never very likely.

The final nail in Iomega's coffin was the so-called 'click of death', a design flaw in the Zip technology that would cause drives to vibrate themselves to death – taking out any data on a disk used within a faulty unit. This did nothing to bolster sales of a rapidly dating technology.

Since CD-Rs and DVD-Rs became the norm for rapid data transfer, Iomega has been a company struggling to find its place in a suddenly hostile marketplace. At first trying to join in on the writable CD game with an external drive, then switching to a hard-disk based backup system that was met with apathy from corporate users, Iomega has been struggling for quite some time. Despite this, the company clearly has expertise in the consumer backup arena, and it's likely to be a canny buy for EMC.

EMC has announced that it will retain the Iomega brand name for use in the consumer realm, which is sensible – anyone who's been in a high-street PC store in the last few years will be a lot more familiar with the reassuring blue Iomega logo than the corporate-targeted EMC. Iomega's ex-CEO, Jonathan Huberman, will also be transferring to EMC to head up the Iomega-branded consumer division.

With a fresh injection of talent and – most importantly – money, Iomega could finally make it back into the hearts and homes of PC users everywhere.

Do you remember Iomega with fondness, or are the memories of unreadable Zip disks caused by the click of death too fresh? Share your thoughts over in the forums.
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