New Report Forecasts Huge Growth for Remote Backup Services

A new report predicts revenue from consumer use of remote backup services will grow from $75 million in 2009 to more than $372 million in 2015 at a rate of about 28% a year.

The report from ABI Research is good news for Managed Services Providers who can take advantage of the current boom in the Remote Backup industry by offering their customers a profitable level of service.

I said “profitable level of service,” because the report also gives us some clues about who is using Remote Backup services, and who is [not] paying for them. According to the report, only 11.6% of Remote Backup services used by the consumer market in 2009 were actually paid for. The consumer market is made up of personal, non-business users.

This means that 88.4% of consumers who back up online are using free (or trial) services like those offered by Mozy and Carbonite. An internal survey conducted by Remote Backup Systems in 2008 showed that fewer than 3.5% of consumers who use trial accounts convert to paid accounts.

The ABI report also indicated why so many consumers use free remote backup services – “Duh, ‘cause they’re FREE!” The report is based on the responses of 1000+ US consumers.

For most MSPs, “Free” is not a profitable level of service. However, ABI’s Larry Fisher surmises that consumers using free services will recommend the more profitable business level versions to their employers. That’s what Apple surmised too, when they gave away so many computers to schools to get kids hooked, and when those kids grew up and went to work, Apple took over the business computing market. Oh wait, that didn’t happen, did it?

Despite my personal disagreement with Larry’s surmises (is that a word?) about how to take over the Remote Backup world by giving everything away I am seeing a significant increase in business for the Managed Service Providers who charge a profitable fee for their Remote Backup services. This growth is being driven by an increased public awareness of online backup as a cost-saving, business-saving alternative to unreliable and labor intensive tapes, CDs and other legacy backup technology.

Backing up “in the cloud” is widely accepted by businesses willing to pay for the high level of service MSPs can offer using Remote Backup Systems’ software. In fact, they really appreciate having their backed up data locally available for quick restore instead of being stored across the country somewhere at Mozy or Carbonite where nobody knows them, and restoring a computer might run on for days – like this sentence.

I think a five-fold increase in revenue over five years is too conservative. I put the figure closer to ten times the current revenue.

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.