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Summary:

My post, How to standout in a sea of storage startups resulted in a spirited conversation, including some really insightful comments here and else where on the web. Raghu Kulkarni, CEO of Pro Softnet, a Woodland Hills, Calif.-based company said not only he is selling his […]

My post, How to standout in a sea of storage startups resulted in a spirited conversation, including some really insightful comments here and else where on the web. Raghu Kulkarni, CEO of Pro Softnet, a Woodland Hills, Calif.-based company said not only he is selling his IDrive and IBackup offerings, he is making a hefty profit. Apparently he isn’t the only one seeing brisk sales of online back-up services.

David Friend, CEO of Carbonite emailed to let us know that his Boston-based company is doing well. “We’ve enjoyed 26 consecutive months of double-digit month-over-month revenue growth,” he wrote in an email. He claimed “hundreds of thousands people paying about $50 every year in subscription fees. Theoretically, at 100,000 subscribers, the company could bring in an estimated $5 million a year.

While he agreed with the premise of the original article — little or no hope for ad supported services — he points out that many online storage services are doing too many things when people are looking for simple solutions. “Pure, simple, set-and-forget online backup is thriving,” he wrote in an email, pointing out that “Online backup is a great subscription business.  You pay your money and your worries go away. The user’s problem is clear:  “Protect me from disk crashes, theft, fire, viruses.”

Maybe that explains why EMC acquired Mozy for $76 million and Symantec paid $123 million for Swapdrive. Carbonite wouldn’t mind a pay-day like that: three year old company has raised a total of $17.5 million in two rounds of funding from Menlo Ventures, 3i Group and Common Angels.

“I think that when the dust settles in four or five years, the online backup market is going to look a lot like the anti-virus market. Almost every PC is going to ship with online backup built-in,” Carbonite Friend writes. Dell currently sells such a service. In such a scenario, broadband service providers who are looking to pad their ARPU might snap up some of these back-up services and offer them to their customers. Broadband Service Providers have already started to experiment with support and other such value services.

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* Options for back up your files (WebWorkerDaily)

  1. Raghu Kulkarni Sunday, August 31, 2008

    Om,

    I did not say that we make a ‘hefty’ profit, I just mentioned that we are profitable!

    I do agree with David Friend’s comments that online backup is here to stay and it solves a very real user problem.

    But online backup is not the only possible success story in storage. Pay as you use storage service S3 is apparently very successful. There may be many untapped opportunities in cloud storage with this model with various access options including open protocols such as WebDAV, NFS, CIFS etc. (although some of these protocols may need to be tuned for WAN as they are designed for LAN.

    There are other niches in storage that may succeed. For example, we are working towards a product that EXTENDS desktop applications to the web.
    You can use your Access or Quickbooks applications and use them in multiuser mode with users spread across geography using cloud storage (http://www.fogdrive.com).

    Raghu Kulkarni

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  2. Agree: There’s a boom in online backups and customers are asking for it!

    Disagree: With some of the the points on ‘set it, forget it’ solutions.

    As much as many would like to think otherwise, backups are simply not a ‘set it, forget it’ kinda service. While this might, at best, be true for the home/SoHo market which can perhaps afford to be relatively lax about their data and lose that MP3 that they can download again (doesn’t apply for that photo of your grandmum, though), it cannot/doesn’t apply to business users who need more that a ‘set it forget it’ option for mission critical data like mail & databases.

    Which is why, there’s a related boom in service provider assisted online backups – or managed online backups, i.e., a role for the channel.

    Look around you… services like Symantec Protection Network, eVault (now Seagate), even Mozy and ‘software for service providers’ vendors like Asigra, eVault and Vembu – they’re all focused on the channel.

    I think its even dangerous to suggest that businesses can manage with a configure & forget service. Backups simply don’t work that way – they seem destined to remain relatively painful & high touch, in spite of what vendors may try & make us think otherwise.

    My 0.02 – from a service provider’s trenches

    S

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  3. @Steve

    I think the set-and-forget is more for home users I think. Even then I think, the back-ups are still hit-and-miss. Even though I have tried many a few services, it is hard to say that I love one over the other.

    I think the only service that works as advertised is Dropbox, though it is not a back-up service: more of syncing-solution with storage.

    What service do you use?

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  4. I would recommend Mozy’s backup service, we have several clients on it and they let consumers start off with 2gb for free per month. So far the backup/retrieval process has been a breeze

    http://www.mozy.com

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  5. raghu Kulkarni Monday, September 1, 2008

    Om,

    This is interesting. Why don’t you give a brief experience summary of the online backup services you have used? You know, like the way you describe your experience with iphones, gmail etc..

    Raghu

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  6. I prefer IDrive over mozy and carbonite. At least I was able to restore my ten gig data with IDrive within a few hours. As OM has pointed out, all these services are hits and misses. There is still room for better reliability. May be GDrive is the One?

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  7. There is clearly a great deal of interest in this space, both on the part of potential customers and the providers (who like myself, tend to comment early and often on posts such as this).

    While demand is growing swiftly and supporting businesses like Carbonite, ElephantDrive, Mozy, and ProSoftNet, the real addressable market is still materializing. The questions are 1) how long will it take for the bulk of the market to materialize, and 2) who will have the most compelling offering. There is debate over both questions.

    In terms of the market timing, I believe the the hype is warranted and that the next 18-24 months will be the beginning of a major inflection point in the amount of personal data that is stored online. All these players seem to agree but there are certainly nay-sayers who focus on the problems of trust and reliability of cloud services.

    In terms of the right product mix, I believe that the most compelling product offering will need to extend beyond simple “fire-and-forget” backup. This is both because of Steve’s (comment above) astute observation that there really is no such thing as “fire-and-forget” (a backup is only as good as your last restore), AND because I think that end users will look for one easy to use data service that provides backup, access, and organization/sharing across devices. There does not appear to be a consensus among the existing providers about this and I look forward to seeing the end users make the call.

    Om – I would love to discuss more offline if you are interested.

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  8. I’m not too sure of the commercial viability of home user targeted ‘low priced’ online backup services. While storage, processing power & the underlying connectivity infrastructure are getting rapidly commoditized, there is still a strong service element to the whole online backup equation – TECHNICAL SUPPORT!

    Online backup – even to home users – does not work like Skype. It requires much more caring and feeding. That is the nature of the beast. It simply does not lend itself to be a absolute commodity play because of the support intensive nature of this domain. Hence, it is no wonder the one who got the maximum brand recognition, Mozy, decided to sell out quite quickly. We believe Mozy was overwhelmed by the support intensive nature of the backup business and could not have sustained themselves for too long without raising massive capital – like what Carbonite has been doing.

    The cost of (properly) supporting a customer is a finite number that doesn’t, in our experience, converge to zero very soon. While every software vendor obviously takes great effort to ensure their software is as ‘plug & play’ as possible, the number of use cases is simply too much to not warrant support. We consistently see this across our rapidly growing base of over 900 service providers & their customers – in spite of the fact that many people choose us for our usability led design.

    Hence, we believe the real ‘business’ play will however be in the business segment – with SMBs leading the way and mid-market/enterprise following suit later. And yes, this will be support intensive – for the foreseeable future, at least! On a related note, a recent freewheeling chat with our CEO is available at http://www.backupanytime.com/blog/2008/08/26/backupanytime-interview-with-sekar-vembu-of-vembu-technologies/ – it touches upon some of the views articulated in this thread.

    Lakshmanan (Lux) Narayan
    President
    Vembu Technologies
    http://www.vembu.com

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  9. The success of simple offerings like Mozy, Carbonite, and others like them is not the end of the online backup story, but only an indicator of a much larger developing story that’s only beginning to unfold now. Users of online backup, who used to only understand online backup, will predictably get to a point wheere they have a fuller understanding of how backup alone can compare to the rest of the picture that includes archive for example, or sync for another…

    Simple online backup only provides the simple backup-only component of online data management as a compulsory fulfillment of what’s so far been defined as reqiusite… This is bound to change and it’s clearly evident that it’s at least beginning to change.

    Archive is next on the critical path of PC users’ needs. Services that only offer ‘unlimited backup’ are not prepared for the point when the customer file systems they’ve been replicating begin to reach their finite capacity.

    I agree with Steve and that the discussion/debate surrounding the market viability of online storage versus simple plug-and-play online backup (and what must be true in order for a given online backup solution to really be considered ‘plug-and-play…’) is one that deserves more airtime.

    It’s fairly obvious that simple backup-only solutions have seen rampant success. But it’s also obvious to note the number of new solutions now emerging to offer simple online backup as a matter of course, along with other powerfully useful functionality, so I also agree with Michael that the real addressable market is still materializing.

    Our non-expiring free Tilana Reserve™ account offers 2GB of space for use as backup or archive storage. The account holder can use it natively for backup-only or backup-plus-archive (deleted files and version history), in addition to unlimited file and folder sync for an unlimited number of computers on the same account.

    Our $49.95/yr account offers the same ‘unlimited backup’ per computer offered by the leaders, but with the ability to delete protected content without losing it from the data center as well. Customers are simply charged $0.50/GB/mo for anything they want to keep stored in the data center, but no longer need on their computers. Our multi-computer sync account includes 30GB for the same $49.95/yr and $0.50/GB/mo over…

    ______________________
    Derek Finley
    VP Marketing

    derek@tilana.com

    Tilana Systems Corp.
    http://www.tilana.com

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  10. [...] in demand from consumers who are worried about their digital data. David Friend, CEO of Carbonite, told us that he wouldn’t be surprised that in a few years “almost every PC is going to ship with [...]

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