EMC's acquisition of BDS signals changing storage and SaaS landscape 4 October, 2007 By Liam Lahey

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Berkeley Data Systems powers Mozy -- online subscription services for the protection of data that resides on desktops, notebooks, and remote office servers. EMC officials stated the transaction would not have a material impact on its revenues in 2007 adding Mozy is a natural extension of EMC's role in the protection and security of personal and business information.

"Mozy's technology and online delivery model has proven itself to be one of the industry's most admired offerings for customers looking to safely and cost-effectively backup and recover their digital information stored on desktops, laptops, and remote office servers," said Tom Heiser, senior vice president, corporate development and new ventures, for Hopkinton, Mass.-based EMC. "We will continue to invest in Mozy's full portfolio of online backup and recovery services and advance the Mozy brand in the marketplace."

EMC officials remained vague in terms of the amount of money the company paid for BDS, stating only, "the figure ($76 million) is in the range."

With the cat out of the bag it could now be said with conviction the EMC acquisition, and Seagate's recent purchase of EVault, would prove to be the flashpoint for online and outsourced storage coming of age and becoming a primary consideration for businesses.

With multiple smaller players having sprung up in the SaaS (Software-as-a-Service) marketplace over the last few years, consolidation might be afoot in due time. Otherwise, given the strength of EMC's solutions and its' reach into the channel, it is anticipated the once wobbly online data backup market has grown strong and would soon be ripe for prime time.

Michelle Warren, IT analyst, Indaba Division, Info-Tech Research Group, said she wasn't surprised to see the deal consummated.

"When major, tier one vendors move into a market especially through acquisition it is an indication that a market is maturing . . . EMC and Seagate entering it is a huge indication that this market is maturing," she said. "This bodes well for users, as prices often decline with the increased competition.

"The number of competitors might diminish. However, the size of the organizations and the amount they will invest in the business is a big indication of the growth of the market."

Yet Warren took a wait-and-see view as to how EMC would deliver these services to their clients. There is room for the channel to be involved with the go-to-market strategy -- through marketing initiatives and customer service such as financial support from the vendors would be helpful.

"However, if this remains a SaaS practice -- simply online -- then EMC will have to address its channel partners to maintain their support," she said. "This shift opens up the opportunities for online vendors and SaaS in particular. Online storage could potentially be a huge market. The word must get out though.

"And with the limited touch points (for instance, resellers and retailers not being involved), the message must come from other avenues -- perhaps online or virally. The reseller partner might still be called in for an expert opinion and installation assistance."

Michael Schwab, vice president of purchasing for Harrisburg, Pa.-based D&H Distributing, concurred organizations such as EMC and Seagate would be compelled to bring the online backup opportunity forward as a channel-play.

"It'll develop over time," he said. "We see this as a VAR play with recurring revenues . . . I envision D&H selling -- through Seagate or whatever organization -- services for the reseller to sell to their SMB customer base [a solution] that is backing up data locally and storing it [online] somewhere with access to that data 24/7."

Rob Enderle, principal analyst for The Enderle Group, recently noted given the number of disasters we have been having these services, like virus protection, should be on everyone's short list of things to subscribe to.

"The historic problem was that people didn't understand the risk and backup performance (due to early slow dial-in data rates) was simply not adequate. More people now realize that their lives are recorded on their PCs and that they can lose that record, forever, if they lose a hard drive due to theft, disaster, accident, or hardware failure," he remarked. "And that when you add the low probabilities of each up with the others the probability of any one of these happening is way too high given the value of the data."

As people move en masse to home and small office servers -- which aggregate even more data into one vulnerable place -- these services should start to accelerate and likely would be a part of the core software on every PC we touch, he added.

D&H's Schwab said users should view home server and backup services as they would a home alarm security system. In the case of the latter, the user is conscious he/she is paying for a valuable service.

"We need to migrate that attitude to this business," he remarked. "This is where the reseller comes in."