Kaseya 2: Another Reality Check for Managed Services Providers

Kaseya 2: Another Reality Check for Managed Services Providers

When it comes to the Kaseya 2 platform, there's a lot of noise in the market. On one side of the fence, some vocal critics claim MSPs are defecting to alternative platforms. On the other side of the fence, Kaseya says it had "explosive" Q1 2010 growth, driven by the Kaseya 2 platform launch. So what's the reality? Here are some potential clues.

No matter who I speak with, most folks tell me Kaseya has hit some bumps with the recent Kaseya 2 launch. Generally speaking, MSPs tell me they believe in Kaseya 2's design, architecture and vision. But the initial general release contained key bugs that weren't uncovered during the beta process. As a result, Kaseya's support lines seemed overwhelmed in early March 2010 -- though I hear the support response has improved dramatically in recent weeks.

Also of note: Many early Kaseya 2 adopters tried to run the new on-premises platform on 2- and 3-year-old hardware. The result was sluggish performance, and Kaseya has been telling MSPs to make sure they carefully consider K2's hardware requirements before making an upgrade move. Meanwhile, Kaseya 2's SaaS platform remains in extended beta. I suspect we'll all get a status update during the Kaseya Users Conference, scheduled for June 1-3 in Las Vegas.

There are also questions about pricing. At first, I dismissed an apparent Kaseya 2 pricing controversy in Australia. But more recently, Kaseya pricing questions have popped up in the UK. And I've heard from a range of MSP-centric organizations and pundits -- such as MSP Services Network and Stuart Selbst -- about potential MSP defections from Kaseya.

Meanwhile, traditional Kaseya rivals like Level Platforms, N-able, Nimsoft and Zenith Infotech seem to be taking the high road -- focused on winning new business without necessarily taking direct shots at Kaseya. But upstarts like Labtech Software and Europe's CentraStage are publicly claiming competitive wins against Kaseya. And I've heard from a range of sources who say the ConnectWise Capital investment in Labtech has triggered more intense market competition.

Back in December 2009, I took some heat for publishing a blog about forthcoming coopetition (cooperation and competition) between ConnectWise and Kaseya. Fast forward to the present and I think it's safe to say the blog entry was on the mark.

Kaseya: Still The Largest Player

But back to the story at hand: How is Kaseya 2 really performing in the market?

After some initial bumps, I sense that Kaseya has addressed some bugs in K2, and I also think the real story will emerge in the second half of 2010. Remember: Kaseya is trying to maintain a controlled rollout of K2.

Generally speaking, MSPs tell me they do like the K2 architecture and feature set. And the vast majority of Kaseya MSPs with whom I speak plan to take a closer look at K2 later this year. But I do think Kaseya was caught flat-footed on the support front in early March, before working overtime to get support calls under control.

Also of note: To the best of my knowledge, Kaseya is roughly 3 to 5 times larger than many of its industry rivals in terms of annual revenues. Of course, it's always difficult to truly "pinpoint" the size and financial performance of privately held software companies. But Kaseya has publicly stated that the company "has more than 350 employees and is funded through the earn-to-grow model. The company has no debt or external investors." And a related anecdote: The Kaseya User Conference is sold out, indicating continued loyalty from Kaseya's top MSPs.

So what's the ultimate truth about Kaseya 2? Just like an NFL quarterback, on some days Kaseya gets too much glory for its success. On other days, Kaseya takes too many lumps for short-term setbacks. We'll continue to watch the Kaseya 2 story unfold, and report back with our observations as they arise.

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