October 5, 2011
shakeoutThe cloud backup and online backup markets are both expanding and consolidating. Two recent examples: VaultLogix has acquired assets from Utility Backup Solutions, and Vembu recently acquired Cloud Nucleus. Those deals surfaced around the same time that Axcient — a hybrid cloud storage specialist — raised $15.5 million in venture capital funding. Plus, more private equity is expected to flow into the managed services software market really soon, MSPmentor has learned. So how can markets expand and contract at the same time? Here’s some perspective.
My take: Industry consolidation has arrived in two key MSP markets: RMM software and cloud storage. Investors are pumping money into stronger players, and vendors are buying up smaller, sometimes struggling players.
The latest deal: By acquiring certain Utility Backup Solutions assets, VaultLogix now has 5,000 business customers worldwide. VaultLogix claims to offer “complete online backup solutions, either through its own proprietary solution, Internet Vault Advantage, or through existing relationships with third-party online backup software providers.
Financial details were not disclosed. But VaultLogix says the deal will boost revenues while generating “significant cost savings” on a go-forward basis.
The Shakeout Arrives?
The VaultLogix deal comes a few weeks after Vembu acquired Cloud Nucleus, and around the same time that Zenith Infotech spun off Zenith RMM in a private equity deal. And generally speaking, I think we’ll see more M&A (merger and acquisition) activity in the online backup market, especially among cloud backup providers that engage MSPs.
The reason: It seems like the MSP market is overflowing with cloud storage providers that are attending MSP-centric conferences to recruit partners. Is there really enough room for all of these players?
No doubt, stress levels are rising. In recent days, we’ve witnessed a public online squabble between Datto CEO Austin McChord and Axcient. In an open letter, McChord claimed Axcient was spreading false and misleading information about the Datto-StorageCraft relationship.
Axcient CEO Justin Moore’s response: Axcient’s marketing department jumped on an opportunity to engage Datto’s installed base. The opportunity allegedly involved Datto jumping from Appassure back to StorageCraft because of scalability limits.
Moore downplayed the squabble. But I think it exemplifies the changing managed services and backup landscape. Competition is intensifying. Fast-growing companies are attracting venture capital. M&A deals — sometimes involving weaker players who need well-funded parents — are accelerating. And we’ll see another major private equity deal really soon in the managed services space, a trusted MSPmentor source continues to tell me.
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