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Iomega Gets Its NAS Kicked

After losing about $16 million on its NAS product line last year, Iomega Corp. is changing its strategy to a "think small" approach. Put another way, it's cutting off its NAS to save its ASS.

During its quarterly earnings call yesterday, Iomega announced it cut 29 NAS staffers in December and will discontinue its higher-end NAS systems.

Until now, Iomega's played a broad hand in the NAS space, trying to capitalize on Microsofts NAS support to win small and medium-sized business customers. It didn’t work. Iomega reported a $6.1 million loss in networked storage last quarter on revenue of $3.7 million. CEO Werner Heid said Iomega averaged losses of $4 million per quarter in 2003 on networked storage. Last quarter’s loss included roughly $2.3 million related to severance and other expenses related to the layoffs.

Iomega’s revised NAS strategy is to chase the small office and small business market with entry-level systems that require little or no IT support.

Specifically, Iomega’s NAS family has until now ranged from 160 GBytes to 2 TByes of capacity, with prices from $300 to just under $25,000. Heid says Iomega will focus now on products with up to 1 Tbyte of capacity, priced from $500 to $3,000.

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