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Enterprise backup software avoids storage sales slump

Dave Raffo

While overall storage sales slowed at the start of 2013, enterprise backup software from Symantec

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and CommVault experienced strong growth.

Earnings reports from Symantec, CommVault and Quantum last week provided a good snapshot of the overall enterprise backup industry. Symantec NetBackup and CommVault Simpana increased sales in double digits over the previous year and in the opening quarter of this year. But that doesn't mean all backup is booming. Symantec's Backup Exec small- and medium-sized business (SMB) product continues to stumble and Quantum got stung by a deep tape decline.

The sharp increase of enterprise backup software revenue comes after large storage vendors reported tepid growth -- or none at all. EMC's overall revenue increased only 6%, and its core storage business grew 3% in the first quarter of 2013; Hitachi Data Systems revenue increased 1%; and IBM storage revenues fell 10%.

Symantec's storage and server business -- most of that NetBackup -- made up more than one-third of the vendor's $314 million in income last quarter. Symantec reported revenue of $1.748 billion for the quarter, up 4% from the previous year.

Symantec backup revenue grew 7% and NetBackup grew more than 10%, while Backup Exec declined.

Symantec executives said NetBackup's growth is due largely to its built-in appliance model. Symantec offers customers the option of buying NetBackup software on a disk appliance with deduplication, eliminating the need to buy a separate media server and disk target.

Symantec CEO Stephen Bennett, who took over in July 2012, said NetBackup is one of the key products in the company's long-term strategy, as it tries to pare down the 150 or so point solutions it now sells.

Bennett said NetBackup is Symantec's highest revenue application and was one of its fastest growing over the past year. "We're going to double down on some great point solutions that are leaders like NetBackup," Bennett said on the earnings call.

Backup Exec is another story. While Symantec did not specifically break out its revenue, it obviously fell as it continues to suffer the backlash of a poorly received early-2012 redesign. Symantec is still scrambling to add popular features that it removed, and is behind the schedule it promised unhappy customers last year.

"Backup Exec has been something of a challenge," Symantec Chief Financial Officer James Beer said.

To try and solve the problem, Bennett said Symantec has put management of Backup Exec under the same team that managed NetBackup.

"We've made a lot of changes in the team that stubbed its toe on the release of Backup Exec," he said. "So I think we're going to see real progress, but we did dig ourselves [in] a hole."

CommVault's revenue grew even more impressively than Symantec's. Its $138 million in revenue last quarter increased 21% from the previous year.

CommVault CEO Bob Hammer said the new Simpana 10 release is pushing CommVault into larger enterprise deals driven by its protection of virtual machines, source-side deduplication and snapshot-based data protection.

Unlike Symantec, CommVault resists packaging its software on its own appliances. It does have hardware OEM partners that package Simpana, however.

CommVault is pulling back from its biggest hardware partner, Dell. That's largely because Dell has acquired its own backup software over the past year or so, adding AppAssure SMB backup and Quest's vRanger and NetVault enterprise applications. Dell is also in the process of going private, which is taking longer than originally expected.

CommVault's sales through Dell were about the same last quarter as they were a year ago, and CommVault executives on the earnings call said they are adding other distribution partners to pick up the slack.

"We do not operate on hope," Hammer said when asked about his company's relationship with Dell. "We operate on plans we can execute and there's a lot of uncertainty at Dell. So we're taking direct action to move most of our enterprise revenue at Dell to other distribution partners. You can't work with a partner when there's that much uncertainty sitting out there."

Quantum: Tape is a drag

Quantum reported $140 million in revenue for last quarter -- down 13% from the previous year -- and lost $14.5 million. Most of the declines came from tape, although its DXi disk backup platform also declined 4%. StorNext archiving revenue grew 9% over last year.

Last quarter ended Quantum's fiscal year; its revenue for the year dropped 10% to $588 million and it lost $52 million.

A year ago, Quantum CEO Jon Gacek predicted his company was on the verge of turning things around. But Quantum's revenues actually fell during the year and the company had to lay off 10% of its workforce.

"It was a tough year in storage overall and very tough for tape," Gacek said last week.

Gacek said he still has high hopes for the DXi platform, StorNext appliances and the vendor's new Lattus object-storage products. But most of Quantum's revenue comes from tape, and he is not sure if that business will bounce back.

"I don't want to plan on it," he said when asked if he expected tape to rebound. "It's hard to know if it's an anomaly or a new level set. But I can always build more tape libraries if it does come back. We're not pulling back on tape per se; we just have to be smart about it.

"If it bounced back, we'd be ridiculously profitable."


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