The most recent backup software revenue numbers show that virtualization is still the main driver of sales, and the cloud is on deck to become a major factor.
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Those top backup trends are helping virtual backup specialist Veeam Software and all-in-one backup vendor CommVault outgrow their larger competitors. Privately held Veeam reported that its total bookings revenue increased 100% in the second quarter compared with 2012, and that new bookings revenue grew 96%. CommVault has the fastest-growing backup business among public companies. Its revenue of $134.4 million last quarter increased 21%, helped by the release of its Simpana 10 backup and data management application.
These results compare with market leader Symantec's less than 10% backup software revenue growth reported this week.
Veeam 'hates' legacy technology
Veeam CEO Ratmir Timashev said his company's Backup & Replication software coexists with the larger backup vendors in customer shops because Veeam does not protect data on physical servers. He said Veeam has more than 70,000 customers, and "every one uses something for physical backup. Once they start deploying new applications for virtual machines, they deploy us. We're not taking anything from legacy backup vendors, but at the same time, we are taking business because our customers could use their physical backup for virtual backup."
Timashev said Veeam's 2013 projection calls for $266 million in revenue booking or about $213 million in revenue. That would be up from $175 million in bookings and around $140 million in revenue in 2012.
Veeam is working on expanding into the enterprise with Backup & Replication 7, which includes an Enterprise Plus edition with built-in WAN acceleration and backup from Hewlett-Packard storage snapshots. The vendor is also looking to broaden its Microsoft Hyper-V customer base -- VMware users still make up 90% of its business. Veeam also added tape backup support with version 7 and a cloud backup edition last February. Timashev said the cloud edition "is just the first step" toward greater cloud support, with cloud disaster recovery features on the roadmap.
One thing Veeam does not plan to add is physical backup. "We prefer not to talk about long-term plans beyond six months," Timashev said. "But in version 8, there is a 90% probability that we're not going to have physical backup. That market is shrinking; everything is moving to virtual. We would have to use legacy technology for physical backup, and we hate legacy technology. We want to look at the future."
Veeam this week also said Insight Venture Partners acquired a minority share and a seat on Veeam's board. But Timashev said this is not a venture funding round, even if Veeam is taking money from a venture capitalist (VC) and giving up a stake in the company and a board seat.
He said Insight did not put money into the company, but bought shares from the Veeam founders. He said the VC's main role is to help identify partners and acquisition targets for Veeam.
"Veeam is profitable and has a lot of cash," Timashev said. "We needed a partner who could help us build a billion-dollar company in the next four or five years. We needed a partner who can help us identify adjacent market growth areas so we can build solutions internally or acquire companies."
CommVault CEO: Exciting times for backup
CommVault CEO Bob Hammer said Veeam is still in the low end of the market and doesn't compete directly with CommVault yet. He said CommVault's main competition remains Symantec, IBM and EMC. But he said protection of virtual machines is a main reason why people buy backup software.
"Virtualization is still a major driver, particularly as you deal with hybrid cloud environments where there is on-premises and off-premises data," he said. "You want to seamlessly manage data across different repositories. As you back up tens of thousands of servers and tens of petabytes, virtualization capabilities and automation become more important."
Hammer said the cloud is the other main driver of change in data protection and management.
"These are exciting times to be in our industry," Hammer said. "We are in a rapidly changing IT environment."
He said that while few large customers are backing up to a public cloud because of cost and latency, there are many companies using private clouds to back up and manage data.
"Large customers may have their own private cloud environments consolidating data centers, but they're still managing their cloud," he said. "We don't see a lot of major corporations backing up to the public cloud, but they are using public clouds for archiving and Infrastructure as a Service. The cloud is becoming more pervasive in the enterprise. Over time, we'll see more data [backed up] to the cloud, but not yet."
Hammer said CommVault will add new functionality to Simpana 10 "just about every quarter" to keep up with emerging backup trends. This week, it added file-sharing features to its Simpana Edge module for laptops and mobile devices.
Hammer said the new capabilities will replace the need to use an online file-sharing product such as Dropbox or Box. "It's about a lot more than just protecting and securing data on mobile devices," he said. "We address the whole issue of access for the mobile user and enable file syncing across all devices."
Symantec: NetBackup hot, Backup Exec cold
Backup software leader Symantec reported "high single-digit" growth for its backup revenue. Its enterprise NetBackup product grew in double digits, with integrated appliances making up a big chunk of its revenue, but sales of Symantec's troubled Backup Exec SMB product continued to slip.
On Symantec's earnings call, CEO Stephen Bennett described Backup Exec as an area where the company can improve. "We believe we're on the right track," he said, pointing out that Symantec last week released its long-awaited service pack, adding support for Windows Server 2012 (via an agent) and VMware vSphere 5.1. He said that another service pack to fix migration issues is still on the drawing board.
Bennett said Symantec's backup growth came mostly from the integrated appliances, "as customers look for ways to simplify their expanding backup environments."