As the first quarter of 2010 nears its close, anecdotal evidence from companies such as Autotask and N-able suggest that the managed services market is off to a solid start for the year. Autotask CEO Bob Godgart provided some upbeat anecdotes to a local Albany, N.Y., newspaper. And N-able CEO Gavin Garbutt shared some “freemium” business milestones with me in a FastChat video conversation. Here’s a look at statements from both companies, and the implications for MSPs.

First, my usual qualifier: I’m always careful not to hype the managed services market. Thought many MSPs maintained strong performances during the recession, I hear from plenty of CEOs who struggled to keep their doors open during the downturn. Plus, it’s difficult to pinpoint the overall health of the MSP sector, since so many software suppliers in the industry are privately held  and therefore aren’t required to disclose financial metrics like quarterly net income.

That said, I plan to speak with a range of CEOs in the days ahead to see how their companies performed in Q1. Before I started dialing for perspectives, I spotted some comments from Autotask CEO Bob Godgart. And I also connected with N-able CEO Gavin Garbutt nearly two weeks ago to discuss some momentum statements N-able had been making in the market.

Views From Autotask…

According to an article in the Albany Business Review, Autotask CEO Bob Godgart says…

Assuming the newspaper article was accurate, the figures are reassuring — especially as VARs and MSPs seek to plan their own businesses for the rest of 2010. Generally speaking, I sense that VARs and MSPs  on the U.S. East and West Coast are very upbeat, but mid-country solutions partners — especially thoughts in manufacturing-heavy regions — are still waiting for an economic recovery to kick in.

But this isn’t a pure U.S. story. Autotask says more than 20 percent of revenues come from outside the U.S. That’s pretty impressive, considering Autotask is a pure SaaS system. Generally speaking, some countries continue to lag the U.S. in SaaS adoption because of broadband issues or lack of education on SaaS.

How does Autotask’s growth compare with PSA (professional services automation) rivals like ConnectWise? I’d rather not dwell too much on a head-to-head comparison because…

All that aside, I know some readers are still curious about the discussion. So you can get some mid-2009 financial figures from ConnectWise CEO Arnie Bellini here. And I’ll check in with Bellini for his thoughts on Q1 2010 as well.

And Freemium Software From N-able

Meanwhile, N-able CEO Gavin Garbutt says the company’s latest N-central 7.0 platform is catching on rapidly, winning deployments with roughly half of N-able’s partner base in recent weeks.

N-able unveiled N-central 7.0 and a freemium software strategy at the October 2009 N-able Partner Summit. By mid-March 2010, Garbutt offered MSPmentor an update on the strategy in this FastChat video interview:

The discussion covers:

0:00: Introduction
0:15:  N-central 7.0 — early business feedback
0:45: Background on the N-central launch
1:17: What exactly does N-central do?
1:47: Where does freemium fit in?
3:24: More information
3:45: Conclusion

Competitive Landscape

For N-able and its partner base, N-central 7.0’s successful adoption is particularly critical. In recent months, traditional rivals like Kaseya and Level Platforms — plus emerging rivals in the SaaS market — have launched a range of remote monitoring and management platform upgrades.

Overall, I suspect the MSP software industry remains too highly fragmented to support so many software vendors, and will continue to consolidate in 2010. Recent MSP- and VAR-related software deals have involved CA acquiring Nimsoft, Autotask buying VARStreet, Citrix buying Paglo, and ConnectWise Capital investing in multiple companies.

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