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Carbonite Inc. today bought its way into the midsize enterprise cloud data protection market, acquiring Seagate Technology LLC's EVault cloud backup and disaster recovery as a service (DRaaS) business for $14 million.
Carbonite sells cloud backup primarily to consumers and small businesses of less than 100 employees but has been looking to move up to larger SMBs and small enterprises. Carbonite executives said the key to the deal from a technology standpoint is EVault's failover capabilities, which enable DRaaS.
Carbonite paid considerably less for EVault cloud backup and DR than Seagate's $185 million acquisition price in late 2006.
"This transaction is transformative to our company," said Carbonite president and CEO Mohamad Ali, adding that the deal brings more than 5,000 Seagate EVault customers, 500 service provider partners and 200 employees to Carbonite. "We are taking a big step forward to meeting the entire data protection and business continuity needs of the entire SMB market."
Boston-based Carbonite will retain EVault offices in Salt Lake City, Utah, and Toronto. The deal is expected to close in the first quarter of 2016.
Ali and Carbonite CFO Anthony Folger said revenue from EVault will bring Carbonite's total revenue to about $200 million in 2016, with more than half of that coming from SMBs for the first time. Carbonite executives expect 2015 revenue to be from $136.8 million to $137.2 million.
Carbonite started as a cloud backup vendor for consumers and began a push into business backup with appliances designed for SMBs in mid-2014. But only 37% of its $34.2 million in total bookings were from sales to SMBs last quarter.
With the acquisition, Carbonite gets EVault Cloud Backup and Recovery server backup software, EVault Backup and Recovery Appliances that include on-premises backup for a hybrid approach, and EVault Cloud Resiliency Services that provide failover in the cloud and a one-hour recovery service-level agreement.
The Seagate EVault cloud backup products will make Carbonite more competitive with Barracuda Networks and Datto in the SMB market.
"We talked about expanding the capability of our products by adding VMware support and cloud failover -- EVault brings all that," Folger said. "It brings one of the most sophisticated cloud failover capabilities in the market. They were providing business continuity services for a large segment of customers."
EVault products should help Carbonite address companies with 100 to 500 employees. Carbonite today offers endpoint protection for that market but lacks the failover, archiving, appliance and server protection that EVault brings.
A recent IDC DRaaS MarketScape listed EVault in the major player category, behind leaders IBM, SunGard and Axcient.
IDC research director Phil Goodwin said the EVault cloud backup and DR service's ease of use and user interface are among the best in the market. But he said DRaaS also includes all the processes of DR planning, which go beyond technology.
"One of the keys for DR as a service is the service side of it," Goodwin said. "It's not just having the infrastructure and backup targets, it's having professional services that help organizations develop run books and personnel plans and conduct testing. DR is a triumvirate of people, processes and technology. Just having the technology isn't enough -- you have to have plans for the people and processes as well. The biggest challenge for Carbonite will be to provide that high-level service."
Hard drive maker Seagate never seemed certain about the best way to run EVault. Seagate initially managed EVault as a separate company under the name i365, then went back to the EVault brand before finally bringing it back under the Seagate umbrella in July as part of the Seagate Data Protection platform.
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