Integrated backup appliance vendor Unitrends had a busy year on the financial side in 2013. Insight Ventures Partner bought controlling interest in Unitrends in August, and Unitrends acquired PHD Virtual four months later. The PHD Virtual acquisition gives Unitrends backup software for virtual machines, cloud backup and disaster recovery testing to go with Unitrends' legacy physical backup. Unitrends CEO Mike Coney said another acquisition is coming, and the company will announce it will buy a startup with more cloud backup technology in the coming weeks.
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Coney spoke with SearchDataBackup about the integration with PHD Virtual, the next acquisition, and the Unitrends product roadmap.
How far along are you with the integration of Unitrends and PHD Virtual?
Mike Coney: We decided not to integrate 100% right away, but to run both organizations separately. Although we have opportunities to present one face to the customer, it's still a work in progress. We still have two websites, and we're working on integrating that. The good news is, we were able to grow our businesses last quarter on both sides of the fence, Unitrends legacy and PHD.
In the next couple of weeks, we will be announcing another transaction. It's more of a technology play, but we will start to round out our cloud services offering. We had the choice to build versus buy, and buying this company accelerates our roadmap by 12 months.
You now have backup products for physical servers, backup for virtual servers and cloud backup. Do you plan to integrate any of these applications?
Coney: We will introduce a new bundled software package that will let the customer pick what backup solution he wants. It might be a VMware or [Microsoft] Hyper-V shop, and all they want is hypervisor support and virtual backup associated with that. That would be the PHD Virtual package. Or they might have physical backup requirements, so we'd offer an option in that bundle to pick our UEB legacy Unitrends software that supports hypervisors, but also physical backup. Then we can also bundle in CloudHook for replication and ReliableDR with replication and DR [disaster recovery]testing. All that will be a bundle with a price point similar to what virtual backup vendors are getting for backup only.
We don't have a name for it yet. The inside name we're using is Essentials. But the Essentials bundle will set a new level of price performance for midmarket and larger companies looking for protection for physical and virtual environments, or one or the other. We can back that up with an appliance or replication to the cloud.
So we're not just that point niche product for an SMB customer like Acronis might be, or Veeam Software. We're able to become more of a solution sale. When you do that, you get pulled into larger accounts.
Is Essentials a software package, or sold on your appliance?
Coney: It's software-only, and will be priced by socket. If you have a quote for PHD software and it includes DR, it's about $1,200 dollars a socket. Now, for that $1,200 a socket, I'm adding our Unitrends virtual appliance to that offering. Customers can pick and mix and match what kind of backup solution they need. We're seeing a lot of customers in the midmarket who don't have a lot of money to spend in DR testing. They can deploy ReliableDR and test their DR at the same price point as Veeam, which is without any physical backup or reliable DR testing. Veeam is the leader in that segment, but customers in the midmarket and medium enterprise market really look for value.
We'll roll that out in the second quarter. If it does well, we will continue to ramp up that software bundle.
Even though integration isn't yet 100%, it sounds like you are doing a lot on the PHD side.
Coney: PHD has a major release coming out in 30 days with a ton of features. We have 200 beta customers out there now. And as customers interact with our websites, they're evaluating Veeam and PHD, and then ask for physical protection or Unix or some of the more heterogeneous type stuff, they can quickly engage a sales engineer from the Unitrends side.
Will you eventually integrate PHD software on appliances?
Coney: Yes. There are some technology issues. You will see a common user interface, probably by the end of the third quarter. When you look at Veeam and some of the customer feedback around PHD Virtual, they want it simple, easy, no agents; they want it to plug and play and be up and running quickly. With our UEB legacy Unitrends virtual appliance and backup appliance, there's a lot of complexity to it because it does a hell of a lot. The environment it supports is complex -- it's heterogeneous, it supports 100 operating systems, it's not plug-and-play. We're constantly working on the user interface to make it easier to deploy. We're coming out with a 3.0 user interface that will be more PHD-like.
The core of the product is not going to change, except for a normal development cycle and feature enhancements.
You probably remember what Symantec did with BackupExec. We're not doing that. We're not dumbing it down. We're not going to make the mistakes Symantec made with Backup Exec.
You now have appliances that can back up 50 TB on one box. Has that brought you out of the SMB market into small enterprises?
Coney: We're not forcing our sales teams or channel to go up or down market. We service customers right around a terabyte and above from a storage capacity standpoint. So these are more on the small business side, and we go all the way up to [the] small- to medium-[sized] enterprise. What's happening with our roadmap is we have two major software releases coming up in the next 30 days. With those releases and the past couple of releases, our feature set and [our] ability to support larger environments is growing, so we are getting pulled into larger transactions and larger customers. But that's driven by our technology and not a different go-to-market strategy.
Integrated appliances are picking up steam, especially since Symantec added that option for its backup apps. Who do you compete with the most, and how do you win deals?
Coney: We don't see Symantec that much. We see Barracuda a lot.
We have a much broader product set from the appliance perspective. When customers look at our product, it's around TCO [total cost of ownership], capabilities with cloud backup and archiving, the way we allow off-site and on-site replication, virtual data protection and a heterogeneous approach with our backup products. You can spin up your Windows environment on our box, so that DR as a service -- whether it's in the cloud or on a local appliance -- is a big benefit for midmarket and SMB customers.
Backing up is easy, but when the rubber hits the road is when you have a disaster, and that disaster could be anywhere from when the CEO lost his laptop or Billy Backhoe cuts your T1 link.
Getting access to data is so important. How do I get my data back when I have a board meeting or a customer meeting, or the infrastructure is down? We got a call the other day from one of our customers that is under investigation from the FBI. They needed data and couldn't get access to it. They couldn't find it. They needed help, and we got all the data they needed.
Why do you lose deals?
Coney: There are a lot of reasons. Maybe we didn't have the VAR [value-added reseller] relationship. A lot of midmarket customers buy through VARs. Sometimes we lose because we're not there first and we don't have the relationship with the VAR, and the end-user customer was relying on that VAR to make a recommendation. If we're not known to the VAR and the VAR is new to us, we might lose in that situation.
Same with end users; we might lose if we're not there early on and maybe they're just shopping a current quote they have with EMC, Symantec or CommVault.
Or there might be specific features that the customer requires or some sort of support from an application perspective, and we're not a good technical fit. You can't be all things to all people. We're in complex environments, especially when you move upmarket. Unfortunately, you can't win them all.
We're driving the roadmap to close some of those technology gaps, and with Insight's funding and some of the auctions we're doing, hopefully we'll be in position to set the stage better on some of the feature stuff.
This year, about 20% of our revenues are going back in engineering. And our VAR relationships are getting stronger than ever.
What more can you say about the company you're acquiring?
Coney: You should know that, with that acquisition, we won't be announcing a product. The product is in [the] development cycle; it's an end-of-year type introduction.
How is the cloud impacting your business?
Coney: It's the fastest growing piece of my business. Now we basically do archiving and DR as a service. It's more of a DR play. It's not backup into the cloud. We have our backup targets on-site, and then you send data or replicate it into our cloud or our partner's cloud, or a public cloud like Amazon. When customers engage you on that, it's a service like a utility bill.
Cloud is an enabler of that. It gives you the ability to sell things as a service. That's the direction we'll take. We won't abandon appliances or software, we'll just enhance them with cloud offerings. That's why this coming acquisition is so important for us. It accelerates our efforts in that area by 12 to 18 months. It's not an insignificant investment.
What are you doing with endpoint backup?
Coney: We support Windows, Mac, 100 different operating systems, some of which run on mobile or endpoint. Our next release is in beta now. It has a much more robust endpoint offering. We have the ability to automatically track DNS [domain name servers] on laptops. Customers have been asking for it. We do it today, but it's not as automated as it is going to be. It will be rolling out at the end of the month.