BDR Cloud Services Market: Innovation vs. Commoditization
When it comes to cloud-based backup and disaster recovery (BDR) services, the market is still growing rapidly but some MSPs are starting to worry about commoditization. No doubt, vendors want to stay ahead of the commoditization curve. Among the moves we're watching: Some key developments over at Axcient, CA Technologies, CloudBerry Lab, Datto, GridStore and Veeam. Here's the background.
The vast majority of MSPmentor 501 companies offer some sort of managed storage, cloud BDR or business continuity solution. Sometimes, I think BDR companies spend too much time trying to steal market share from one another rather than trying to grow the overall market pie. The market share war has occasionally triggered layoffs and financial hiccups — including recent layoffs at Intronis (though a new CEO hire could occur soon), a debt default at Zenith Infotech (outcome still pending), and Doyenz ultimately getting acquired last year.
So what next moves or trends are we seeing?
Axcient Still Staffing Up
Axcient has hired Mark Swendsen as VP of sales. The company says Swendsen previously achieved 400 percent sales growth at ShoreTel (NASDAQ: SHOR). He now leads Axcient's sales and partner programs — including MSP and VAR engagements, and relationships with three key distributors. It's the latest in a growing list of key hires at Axcient, which recently raised $20 million in series D funding.
CEO Justin Moore has long-promised that Axcient will continue to evolve its cloud platform. And I stress the word platform. I'm not suggesting it will become the next Amazon Simple Storage Service (S3) in terms of mass-market capabilities… but I do suspect Axcient is using its venture money to expand Axcient's cloud to new areas that have yet to be publicly announced. During a quick call earlier this week, Moore said the company remains in growth mode.
Side note: I heard a handful of staff members have recently exited Axcient. But those exits were not bottom-line budget cuts. Rather, let me use this football analogy. Say a team wants to switch from a run-minded offense to more of a pass-minded offense. That would require cutting a running back here and there in order to sign a few wide receivers to stretch the field. And yes, I think Moore wants to stretch the field in abig way as Axcient strives to disrupt Symantec Backup Exec in particular.
CA Technologies ARCserve
Everything old is new again. During a breakfast meeting with MSPmentor earlier this week, Mike Crest (CA Technologies senior VP and GM, Data Management) and Chris Ross (VP worldwide sales, data management) described multiple milestones with the company's ARCserve business.
ARCserve's history stretches back nearly two decades. But CA Technologies has refreshed and greatly extended the brand — including disk-based disaster recovery. ARCserve originally involved traditional software licensing but CA has vastly overhauled its business — building an MSP program and a managed capacity license program. More details about the momentum will likely emerge at CA World (April 21-24, Las Vegas).
In the meantime consider this tidbit: N-able Technologies, the MSP software company, has emerged as a top 15 worldwide partner for ARCserve. That's a pretty huge statement, considering ARCserve's vast global channel. Crest said N-able CEO Gavin Garbutt and President JP Jauvin have been focused, engaged partners who work closely with CA's management team. N-able's software closely integrates with ARCserve.
I can't go into deep details, but CloudBerry Lab's software is the secret sauce in a growing number of cloud connection instances. On the record, I can say CloudBerry Lab is helping MSPs to back up Microsoft SQL Server to the cloud. MSPs can white label the software and plug into Amazon Simple Storage Service (S3) and Amazon Glacier.
In recent months, I've started to believe more and more MSPs will wind up storing their customer data in mainstream clouds like Amazon, Windows Azure and Rackspace. Though I realize proprietary vendor clouds will remain popular, as well, for years to come.
A few minutes before MSPmentor's webcast with Datto today, CEO Austin McChord put me on hold so that he could focus on a few last-minute items. I joked that perhaps McChord was cranking out some code for his next generation of innovation.
Every good joke, of course, has a seed of truth. Market chatter suggests McChord is, indeed, working on something strategic. I just don't know what it is or when it will arrive.
In the meantime, Datto is growing about 300 percent annually. Even more impressive: The company has achieved that growth rate each of the past four years. Through MSP-generated sales, Datto is now managing about 25 petabytes of customer data in its cloud systems.
During the webcast an MSP or two asked if it makes sense to focus exclusively on managed backup services. McChord sees evidence that some MSPs are making that move. I see the same thing — with some healthy consulting services mixed in.
The company is partnering with Veeam to offer software-defined storage for VMware vSphere and Microsoft Hyper-V backup environments.
GridStore is a relatively new name to the IT channel and to MSPs. The start-up hired Axcient veteran Chris Sterbenc in late 2012 to be VP of sales. Sterbenc has an eye for start-ups and company building. I think he has worked on roughly eight or nine start-ups now. The Veeam partnership is especially timely. Veeam is signing up roughly 1,000 new customers per month, and the company also offers a cloud-connection service to link on-premises storage to public clouds like Amazon, Windows Azure, Rackspace and OpenStack systems.
The Big Squeeze
For MSPs, I think the BDR market will continue to grow indefinitely — thanks to endless storage demands from customers. But we'll also see market contraction amid fierce on-premises competition and continued price cuts from Amazon.com, in particular.
Instead of competing against Amazon's price cuts, focus on staying ahead of the innovation curve. Because commodity players are about to get hammered.