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Code42, which started out selling backup to consumers, will shut down its consumer cloud backup product in 2018 to focus on data protection for the enterprise, small business and education sectors.
Code42 CrashPlan for Home will reach its end of life on Oct. 22, 2018, the company said Tuesday. The vendor will refer CrashPlan for Home customers to online backup rival Carbonite. Code42 will also try to convert small businesses using its Home product to CrashPlan for Small Business.
Code42’s consumer business has dwindled to about 10% of its total customer base.
Code42 'sad to move on,' but ready for next step
Minneapolis-based Code42 originated 16 years ago selling exclusively to consumers, said president and CEO Joe Payne. The vendor's business mix has shifted over the years, and it now claims 47,000 business and university customers -- including Duke, Stanford, Adobe and Samsung -- and more than 2.4 million users.
"We've been proud to serve all those consumers," Payne said. "We're a little bit sad to move on even though we know it's the right thing."
Code42's move to leave the consumer backup business reflects a trend in online backup toward commercial use. Early online backup vendors such as Mozy, Carbonite and Code42 focused on consumer backup, but analyst Phil Goodwin points out growth is much faster in the commercial sector now.
"Thus, it is likely a good move for Code42, while giving Carbonite additional economy of scale in its core business," Goodwin, IDC research director for data protection, wrote in an email.
All existing CrashPlan for Home subscriptions will be honored and receive a complimentary 60-day extension at the end of their subscription term. For the consumer customers transitioning to Code42's small business product, Code42 is offering a 75% discount in the first year. For those customers, the small business service will be free while they pay off their old consumer contract, and then the discount kicks in. Code42 has built an instant migration wizard for consumers moving to CrashPlan for Small Business.
Joe Paynepresident and CEO, Code42
Compared to CrashPlan for Home, the small business product has more administrative control, a compliance capability and no long-term contracts, Payne said. Small businesses pay for the number of devices connected, month to month, while most consumers had an annual subscription.
The needs of consumers were diverging from the needs of businesses, Payne said. He expects the move to allow Code42 to innovate faster for business and education customers.
Code42 recognized that there is a third option for their consumer customers: choosing an entirely different vendor. Payne noted that Twitter had lit up Tuesday with vendors offering their services to Code42 CrashPlan for Home customers. IDrive and Backblaze were among those vendors touting their products in the wake of the news.
"We knew that would happen," Payne said.
Carbonite: From competitor to partner
Code42 approached Carbonite because of its solid products and a "strong ability to execute," Payne said.
"We were their first choice," said Norman Guadagno, Carbonite's senior vice president of marketing.
The companies were the two largest providers of cloud backup for consumers and small businesses, Guadagno said. Carbonite claims more than 1.5 million customers.
"They've been great competition," Guadagno said.
For each Code42 CrashPlan for Home customer, Carbonite will recommend one of its plans, based on the customer's information. Carbonite is also providing a 50% discount on its products for the first year for those former Code42 customers, according to Payne.
"It's not exactly apples to apples, but they do provide an excellent cloud backup service," Payne said, noting, for example, that all Code42 plans offer unlimited usage, while not all Carbonite plans provide unlimited usage.
If a CrashPlan for Home customer switches to Carbonite, Code42 will securely delete the customer's data. Then the customer will start fresh with Carbonite.
Guadagno said Carbonite has built a scalable cloud infrastructure that is capable of taking on an influx of new customers. Customers will transition at varied times, as subscriptions run out on different dates spread out over the next 14 months.
Like Code42, Carbonite has also accepted the reality that some customers will move elsewhere, Guadagno said.
While Carbonite has a smooth onboarding experience for new customers, Goodwin wrote, "there is really nothing concrete to compel Code42 customers to transition to Carbonite. They can choose any other competitor or do nothing. There is no automatic transfer of data from Code42 to Carbonite; Code42 [customers] will go through the onboarding process just like any other new Carbonite user. Thus, Carbonite's challenge will be [to] incentivize CrashPlan customers to not only take action at the end of their contract but to do so with Carbonite."
Carbonite has increased its data protection portfolio in recent years. Earlier this year, it bought Double-Take Software to improve its high availability technology. In 2015, it purchased Seagate's EVault cloud backup and disaster-recovery-as-a-service business.
Code42 looking to grow
According to Code42, the transition does not affect any existing relationships or technology offerings with business customers, and the company is not selling or transitioning any proprietary technology, software or other intellectual property.
Payne stressed that it's not a cost-saving measure.
"It's a way for the business to grow," he said.
Code42 does not plan to lay off any employees. The team supporting the Code42 CrashPlan for Home customers will transition over to the education, enterprise and small business customers.
"We made a commitment to every one of those people that they will have a job at Code42," Payne said.
In addition, Code42 has brought in help from a third-party firm for the next 12 months, essentially doubling its support team to aid the transition.
"Nobody likes change. It's not going to be a walk in the park," Payne said. "We want people to know we're trying our best."
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