One of the early entrants into the online backup space is expanding its footprint through acquisition.
Carbonite, which offers data protection to both consumers and businesses, is buying EVault from Seagate Technology in all-cash transaction for US$14 million. The deal, expected to close in January, will enable Carbonite to expand its product portfolio and double its addressable market, according to president and CEO Mohamad Ali, including any SMB with up to 500 employees.
EVault was founded in 1997 and acquired by Seagate in 2006. It offers a full line of cloud-connected appliances supporting failover capability to more than 5,000 customers with a network of more than 500 partners in the form of resellers and managed service providers (MSPs). In a webcast announcing the deal to investors, Ali said the acquisition includes EVault’s intellectual property and 200 employees, and that Carbonite will retain offices in Salt Lake City and Toronto.
According to IDC, IT spending by SMBs in the U.S. alone is anticipated to rise from US$161 billion in 2015 to $190 billion in 2019, while the worldwide data protection and recovery software market is expected to grow from US$6.3 billion this year to $8.2 billion in 2019, with the SMB segment growing faster than the large enterprise market. Ali said SMBs are increasingly realizing that downtime due to lost data can mean a significant loss of revenues and even lead to the demise of the business. “The acquisition of EVault is an incredible, strategic fit.”
He said EVault’s robust technology offers features and functionality that position Carbonite to meet the increasingly complex environments of SMBs by offering scalability and supporting virtualization, as well as failover capabilities that scale out full system recovery to the cloud so businesses can continue to operate without interruption in the advent of disaster. Carbonite already offers a purpose-built cloud for data protection as well as appliances for small businesses, and EVault products are able to back up servers and endpoints to Microsoft Azure as well as protect NetApp environments.
Anthony Folger, Carbonite’s CFO, said he anticipates the acquisition of EVault will mean 50 per cent of the company’s revenues in 2016 will come from SMBs, and that EVault’s technology will enable Carbonite to support more complex data centre environments. “This deal represents a significant opportunity to dramatically expand our product portfolio and our total addressable market and to drive significant cost savings across our business.”
Folger was cautious about comparing growth rates of Carbonite and EVault as the latter is a “division of a division within Seagate,” but did say that EVault was a growing business within Seagate. “Frankly, the reason we are doing this deal is obviously there is a lot of product alignment that we think is really strategic. We think we can grow this business along with the rest of our SMB portfolio.”
Ali said Carbonite has seen more potential in the SMB business and wanted to more effort in growing it compared to its consumer offerings, and that the EVault product line is highly respected and will allow the company to move further upscale in the SMB market. “It is very full-featured. EVault brings one of the most sophisticated cloud-failover capabilities in the market,” he said. “Competitively, we are in a really great position.”
The acquisition will put Carbonite in competition with other appliance vendors, noted Ali, including Barracuda, which is seeing strong growth. “This is a very hot space.”
Despite this consolidation, there remain plenty of options for online backup depending on an organization’s needs that can scale up, such as Amazon S3, while many file sharing services compete with Carbonite, including Microsoft’s OneDrive, which is available to both consumers and enterprises, while consumer-grade file sharing services are finding their way into enterprises as shadow IT.