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Veeam cloud backup sells back N2WS, adding AWS and Azure products

Veeam cloud backup gets a shakeup. The company has sold off N2WS, an AWS data protection company, and has a number of cloud-focused product updates set to launch.

Veeam Software has sold an AWS data protection company it acquired two years ago and will launch Azure- and AWS-focused backup products as part of its own "unified cloud platform."

About 10 months after Veeam's acquisition of N2WS, the U.S. government requested "information regarding the transaction," said Ratmir Timashev, co-founder and executive vice president of Veeam. He declined to provide details on the information request.

"After some discussions with the government in the first half of 2019, Veeam voluntarily made the decision to sell [N2WS] back to its original founders," Timashev said. "And we decided to focus on building our own unified cloud platform, using our internal [research and development] resources."

Veeam cloud backup, N2WS move forward, separately

The sale back to N2WS CEO Ohad Kritz and CTO Uri Wolloch closed in the third quarter of 2019. Veeam is not releasing terms of the sale, but Timashev called it "relatively small."

Veeam bought N2WS and its cloud-native, enterprise backup and recovery for AWS data for $42.5 million at the end of 2017. About eight months earlier, Veeam disclosed it had invested in N2WS. Veeam, a data protection and management vendor with international headquarters in Switzerland and U.S. headquarters in Columbus, Ohio, is also no longer an investor in N2WS.

Ratmir TimashevRatmir Timashev

Timashev said he could not give much more detail about why the government's information request led to the major step of selling back N2WS. He declined to comment on a report that the U.S. government's interest was piqued because it is an N2WS customer and Timashev and Veeam Co-Founder Andrei Baronov are Russian. Baronov is also Veeam's CEO.

"We feel that developing a unified cloud solution, not just AWS [backup], but that is closely integrated with our platform, was the best," Timashev said.

The acquisition of N2WS showed that Veeam understands the importance of native backup technology for public cloud environments, said Archana Venkatraman, research manager at IDC.

"Veeam voluntarily sold the business following discussions with U.S. government, so it was a sensible move given the federal complexities," Venkatraman wrote in an email.

N2WS had operated as a stand-alone business under Veeam, which representatives from both companies said makes the split easier for customers.

The majority of customers who bought the Veeam-owned N2WS were looking for a point product to back up AWS, Timashev said.

"People who were using our software at the time were protecting their current data center and the purchaser of the N2WS solution was someone who was standing up infrastructure in the cloud," said Danny Allan, vice president of product strategy at Veeam.

Ezra Charm, vice president of marketing at N2WS, said he can't comment on what happened on the Veeam side, but noted "the issues were not N2WS issues." The split was "amicable," he said.

"It was really awesome being in the Veeam world," Charm said, citing a larger marketing budget as one positive. "But the best is yet to come."

Charm stressed that IT is still in the beginning stages of the cloud movement, as many workloads that could be in the cloud are not there yet.

"N2WS is well positioned to grow and make a difference," Charm said.

Venkatraman said N2WS is prominent in the AWS Marketplace.

"As an independent company, it will continue growing as demand for cloud data protection continues to grow," she wrote.

Charm acknowledged that "some of this is a little scary." While it's still figuring out the new budget, N2WS is a financially stable company with thousands of customers, Charm said.

N2WS has about 50 employees, including 30 in Israel at its research and development center and 20 in West Palm Beach, Fla., at its sales and marketing headquarters. The company did not let go of any employees as a result of the sale, Charm said.

Backup for AWS, Azure provides important protection

Following the sale, Veeam cloud backup will launch two new products. Veeam Backup for AWS and Veeam Backup for Microsoft Azure will be available as stand-alone point products or integrated with Veeam's platform.

The cloud-native Azure backup will be available at the Microsoft Ignite conference next week in a technology preview. It's slated to be generally available early next year.

The point product offering Azure to Azure backup is much cheaper than the version integrated with the Veeam platform, Timashev said.

Veeam Backup for Microsoft Azure -- both free and paid versions -- will be available for deployment through the Azure Marketplace for cloud-first companies, Allan said. In addition, Veeam Backup & Replication users can extend their protection to Azure-native instances.

The product also features file-level recovery of native snapshots and Veeam backups, as well as the ability to restore to an on-premises data center or any other Veeam-supported environment, Allan said.

The similar Veeam Backup for AWS will be available by the end of 2019.

"That's why we were talking about the unified cloud platform," Timashev said. "So, immediately, it's integrated in our cloud platform as well as available as a [point product]."

After some discussions with the government in the first half of 2019, Veeam voluntarily made the decision to sell [N2WS] back to its original founders. And we decided to focus on building our own unified cloud platform.
Ratmir TimashevCo-founder and executive vice president, Veeam

Veeam and N2WS go from the same company to competitors in AWS backup.

"While both will serve the cloud-native AWS backup market, Veeam's goal has always been broader and that is to deliver data management for all of our customers' data -- across clouds and on-premises data centers," Allan said.

N2WS' most recent product version, Backup & Recovery 2.7, added Amazon S3 Infrequent Access support and intelligent tiering. The 3.0 edition scheduled for general availability in January will feature more integration into other S3 storage tiers.

N2WS' connection to the AWS community, transparent pricing and flexibility in allowing customers to cancel anytime help it stand out, Charm said. Competition is the sign of a "healthy market opportunity," he said, and reinforces N2WS' message that workloads hosted with public cloud providers need protection.

"N2WS has been focused on solving the challenge of protecting data and workloads in the public cloud since 2013," Charm said. "It is great to see that all the major backup providers -- not just Veeam -- are starting to take this seriously."

IDC research found that more than 80% of new application deployments will include cloud. A backup platform that features support for hybrid and multi-cloud environments is a top need, especially for large enterprises, and will help Veeam attract those customers, according to Venkatraman.

"But cloud focus is a top priority for its main competitors, too, and success will be driven by differentiation -- in pricing, in user experience and successful unification, and in channel/go-to-market transformation," she wrote.

Office 365 backup, NAS support and more

The Veeam cloud backup portfolio is also updating its Office 365 protection, the fastest growing product in the history of the company. While Veeam Backup for Microsoft Office 365 previously offered on-premises backup, version 4 will back up directly to the cloud to either Azure or AWS. Veeam had only been addressing half of the market needs, Timashev said.

Veeam Backup for Microsoft Office 365, which covers Exchange, SharePoint and OneDrive, will also add object storage support, including AWS S3, Azure Blob, IBM Cloud and S3-compatible providers. Version 4 will be available as a public beta on Monday with general availability expected by the end of 2019.

Further along in the roadmap, version 10 of the Veeam Availability Suite is scheduled to be available for service providers in December and the general public in January. The top feature is enhanced NAS backup, which incorporates changed file tracking, the ability to "protect from anywhere to anywhere" and snapshot support, Allan said.

The product has been in private beta since the summer.

"It's been tested very extensively by our partners and our customers, so we are pretty confident that we are getting very close," Timashev said.

IDC research showed that unstructured data is growing faster than structured data and organizations need enterprise-grade backup for this environment that houses sensitive data, according to Venkatraman.

"[Veeam's offering] is a wait and watch, but there is a lot of demand for NAS backup among enterprises," she wrote.

Veeam is also "always looking for acquisitions," Timashev said, in areas such as cloud data management and migration, data optimization and cloud optimization.

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