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Veritas has acquired backup-as-a-service startup HubStor.
The HubStor product will be offered by Veritas and its channel partners, and existing HubStor customers can continue to use the service as is for the time being. Veritas plans to integrate HubStor's capabilities, which include data protection for an array of popular SaaS applications, with its Enterprise Data Services Platform. However, Veritas did not disclose a specific roadmap on this integration, the amount it paid for HubStor or whether it will keep the HubStor branding.
HubStor backup as a service covers a wide range of environments and applications. It protects VMs from VMware, Microsoft Hyper-V and Microsoft Azure; Office 365 emails, SharePoint, OneDrive and Teams; Google Drive, Box and Slack; AWS S3 and Azure Blob; and on-premises NAS devices. CEO Geoff Bourgeois and CTO Greg Campbell founded the company in 2015. It is headquartered in Kanata, Ontario.
HubStor's SaaS application protection and ability to deliver that as a service were the most compelling technology reasons for the acquisition, according to Simon Jelley, general manager for Veritas Backup Exec, endpoint protection and SaaS protection. Veritas has offerings to protect Office 365, G Suite and Salesforce, but customers expressed data protection and security concerns about their workplace collaboration applications. HubStor's data protection for Microsoft Teams, Slack and Box would help Veritas address the new demand, Jelley said.
HubStor brings enterprise clout
Veritas sought a company to acquire for SaaS data protection, and HubStor stood out as a startup that had traction in the Fortune 100. Jelley described HubStor as "a perfect fit" for Veritas because it was already proven in the enterprise market, had the data protection capabilities Veritas was looking for and could be merged onto the Enterprise Data Services Platform.
Although Veritas did not disclose the financial terms of the acquisition, Bourgeois said it was a substantial offer and not a case of a larger company acquiring talent and tech for "pennies on the dollar." HubStor was bootstrapped by its co-founders and sustained by recurring revenue from its customers -- Bourgeois had made it a point not to take venture capital money. He said the company was doing well financially and on a good growth trajectory.
"We were not in a position where we had to sell," Bourgeois said.
While selling HubStor wasn't something Bourgeois said he had planned for, he also wasn't surprised by the offer. The data protection industry has many large, incumbent vendors who don't sit idle while startups carve out some of their customer base. He was also concerned that, as a company of barely 20 employees, he wasn't taking over the market fast enough despite having a product that was well-aligned with the current market demand.
"At the five-year mark, we shouldn't be an industry 'best-kept secret' anymore. The acquisition will allow our technology to see the light of day," Bourgeois said.
All HubStor staff were brought on board with the acquisition, forming a team that reports to Jelley. Details on new titles and positions are still being sorted out. Jelley said he intends to invest in the HubStor team.
The push for cloud
Krista Macomber, senior analyst at Evaluator Group, said customers have been looking to use the cloud for data protection since before the COVID-19 pandemic, and the trend has only accelerated because of it. The move to the cloud is hindered in some cases by legacy backup systems, which are expensive, complex to manage, inflexible and embedded, and which don't always support modern data sources and storage targets. Customers can't easily replace their existing data protection infrastructure, nor can they quickly retrain staff to use the new cloud-based tools.
Macomber said startups such as HubStor and Clumio have emerged over the last decade to address data protection in the cloud, but there's also been a trend of larger, more established vendors acquiring these cloud-based startups. She said it makes sense, as integrating the newcomers' technology is faster than building it themselves, and it allows their existing customers who are using legacy systems to transition to cloud-based protection in a way that makes sense and is fully supported. Speaking specifically of the HubStor purchase, Macomber said it greatly expands Veritas' capabilities.
"Data migration to the cloud, continuous data protection for unstructured data and cloud-based resources, and unified backup and archive for these resources are a few areas that HubStor addresses that I see as being valuable additions to the Veritas portfolio," Macomber said.
According to Phil Goodwin, research director at IDC, the pandemic accelerated the move to the cloud and cloud-based data protection. IDC research in the fourth quarter of 2019, prior to the pandemic, projected data replication and protection software to have a +1.2% compound annual growth rate (CAGR) through 2023. That projection is down to -0.8% CAGR through 2024 due to the pandemic.
Meanwhile, IDC's pre-pandemic forecast for backup as a service was 9.5% CAGR through 2023 versus 15.1% CAGR through 2024 now. The numbers seem to indicate fewer companies are buying data protection software and instead turning to as-a-service products.
"This acceleration to the cloud is certainly the reason vendors are moving more aggressively to data protection service solutions in the cloud. Thus, it makes sense for Veritas to enter this fast-growing market, and acquisition is often the fastest route of entry," Goodwin said.
Johnny Yu covers enterprise data protection news for TechTarget's Storage sites SearchDataBackup and SearchDisasterRecovery. Before joining TechTarget in June 2018, he wrote for USA Today's consumer product review site, Reviewed.com.