Mozy Halts Unlimited Backup

In a January 31 announcement on its website, Mozy’s President, Harel Kodesh, finally admitted defeat by halting Mozy’s unsustainable Unlimited backup plan. But he didn’t go down without taking an uncharacteristic desperate swing at competitors, alive and dead. After I read the article my first thought was, “Something is wrong over at Mozy.”

Mozy showed up late and inexperienced to the Online Backup game in 2006 with a ridiculous offer of unlimited backup space for $4.99 per month. Shortly thereafter they suspiciously sold themselves to EMC, and then later split and became something called Decho.

Others of us in the industry saw Mozy’s Unlimited backup plan and ridiculous price as dumping artificially cheap services in our market in an attempt to seize market share before their funding ran out.

They sold a lot of accounts and muddied the water for the rest of us who priced our services reasonably enough to offer a high service level while insuring a reasonable profit.

Didn’t I predict this? Let’s check the Official RBS I-Told-You-So Meter: 

Not only did Mozy drop its Unlimited service, it increased its prices.  You can see the official announcement here: http://mozy.com/home/newplans/

Online Backup service providers using RBS software have not typically concentrated on the home market. It is far less profitable, and more troublesome than the business market. However, Mozy’s millions of dollars spent on advertising its “unlimited” service sometimes made our customers question our higher pricing plans and limited storage quotas.

We have always met that objection by offering higher security, Service Level Agreements, our proximity to our customers, more robust software, on-site support, and willingness to customize a backup plan for individual customers.

Now we have an additional argument: “Unlimited backup for $4.99 was an unsustainable business model and they don’t offer it anymore.”

In his announcement Mr. Kodesh took a jab at other companies still offering “unlimited” backup plans, claiming that they restrict bandwidth as data grows, “effectively choking them off,” while “Others exclude files over a certain size or exclude certain file types.”

In poor form, I thought, he also took a jab at the defunct Xdrive, HP Upline, and Mediamax, implying that they closed up shop because of the trend of consumers storing high resolution videos and pictures online.

The problem with his reasoning is that all of these companies closed long before such high resolution files were widely used. So, that isn’t the reason they closed.

This announcement sounds bitter, like an admission that Mozy’s core business model didn’t work – the model that they spent millions of dollars promoting, and on which they based their entire company. It’s just a very strange announcement.

Strange nonetheless, I am very happy to see it, and it is very good news for the rest of us. It means those of us offering Online Backup services with a high service level for a sustainable price will now have an easier time in the market. 

But perhaps most importantly, the myth of unlimited backup for $4.99/month is now shattered. Hopefully other companies will follow, and the Online Backup market will stabilize at higher, more reasonable prices that allow us more profit to offer better services.

Rob Cosgrove is the President of Remote Backup Systems, founder of the Online Backup Industry, and a vocal advocate for maintaining the highest standards in Online Backup software. His latest book, the Online Backup Guide for Service Providers: How to Start and Operate an Online Backup Service, is available online now, on Amazon.com, and at bookstores.

Remote Backup Systems provides brandable, scalable software and solutions to MSPs and VARs enabling them to offer Online Backup Services.