Mozy Acquisition by EMC Signals Changes in Remote Backup Industry
Mozy Acquisition by EMC Signals Changes in Remote Backup Industry
October 19, 2007
By Rob Cosgrove
CEO, Remote Backup Systems, Inc.
http://remote-backup.com
I’ve just returned from Storage Networking World Fall 2007 in Dallas, TX where much of the buzz was about Mozy’s acquisition by EMC for a whopping $76M. This huge deal took almost everyone by surprise. I spoke with many industry analysts who were scratching their Treos over this one.
I said “almost” because I’ve been predicting this for a decade. I just didn’t expect it to happen this year, with so little warning.
Mozy, you may know, popped on the scene only recently with a direct-to-consumer remote backup service starting out at $4.95 a month using their own software.
Mozy’s entire capitalization was reported to be only $1.6M. So, the Mozy founders realized a profit of $74M and some change. Good for them! And, good for the rest of the Remote Backup industry, too.
Other than the size of this deal and Josh Coates’ excellent leadership at Mozy’s helm, there’s nothing extraordinary about Mozy (the company), their software, their service or their business model. They don’t have their own data center, they have little experience in the market, and they have a business model that has been tried and failed before – MANY times.
Remember DriveWay? FreeDrive? No? Neither do most people. They dropped out of existence a few years ago, along with dozens of others using the same business model – and have only recently been resurrected, at least their websites have.
Mozy’s Client software (the part their customers see on their computers) is simple and adequate for backing up home computers and very small offices (1-5 people) that don’t have a need for a full set of features like mailbox-level Exchange backups, advanced open file backups, SQL Server, local data store, or fast backups (and restores).
In fact, it seems as though the Mozy software designers simply ran out of steam and quit when it came time to write their restore interface, which is inconsistent with the rest of the application, very slow, and sort-of kludgy.
Mozy is (in my opinion) inadequate for enterprise backups, and in fact, for many businesses in general, but the Mozy folks got their knickers in a twist the last time I said that, so I won’t make that mistake again.
So, why did EMC spend such an unbelievable amount of money for Mozy, and why now? According to the grapevine, highly placed spokespeople inside EMC say the answer is as simple as this: EMC wants a share of the remote backup business, and has some research indicating the market is a time bomb with a short fuse, oh, say as short as six to twelve months, after which time remote backup will become the default method for backing up most microcomputers.
I expect the Mozy acquisition to trigger a land grab among large storage companies who don’t already have a remote backup solution, as they buy up existing remote backup service providers. I also expect the growth and profit of current Remote Backup service providers to accelerate greatly. As my wife assured me 20 years ago, “It’s a happnin’ thing, Rob.”
For the past 18 months I’ve been watching Remote Backup service providers grow by leaps and bounds. The number of potential customers seems limitless, they don’t seem to be price-conscious (within limits) and in the light of MySpace and FaceBook they are very quickly becoming comfortable storing their personal information online.
Mozy itself came online with a ho-hum product and virtually no advertising. They built their customer base through word of mouth fueled reportedly by an aggressive (and some say slightly sleazy) campaign of buying fake blog entries with outright cash payments to bloggers who wrote in glowing, syndicated terms about a product they probably hadn’t even tried, publishing their own special “affiliate” links to Mozy’s website so they could get paid in one way or another. Brilliant!
Regardless how Mozy built its $76M worth of perceived value, EMC’s acquisition is very good news for the Remote Backup business, and for service providers, new and old alike. It shows that the Remote Backup industry, which until now has been the red headed stepchild of the Storage industry, is about to become fully adopted.
If Mozy can do this with ho-hum software and an unimaginative service, imagine what can now be done by others with full featured software and more experience in the marketplace. Remote Backup is on the cusp of its evolution into the preferred way to back up microcomputers and their networks, and Remote Backup service providers are finally in the right place at the right time.
###
