Carbonite Puts Its Online Backup Software on Lenovo Computers, Raises $20 Million

9/8/08Follow @wroush

(Page 2 of 2)

copying it back from the companies’ servers. Users don’t have to be concerned about where the services’ data centers are located, or how they’re run—which is what makes online backup an example of cloud computing.

Mozy and Carbonite, the two leading brand names in the online backup market, both offer unlimited storage, and are roughly equivalent in price—the home version of Mozy costs $4.95 per month, while Carbonite’s $49.95 annual fee breaks down to $4.16 per month. (The Mozy-powered online backup service offered with the Lenovo Thinkpad SL is a 90-day free trial with a storage limit of 5 gigabytes; the Carbonite service preinstalled on Lenovo Ideapads is a 30-day free trial with no storage limit.)

Both services are designed so that users can “set it and forget it,” as the saying goes. (I’ve been using Mozy for several months to back up both my home and office computers, and for the most part, I’ve found that it lives up to this promise. The only time I have to pay attention to the software is when I’m sharing bandwidth with other people and I need to manually interrupt the automatic backups.) But the fact that the services are designed to work in the background means that they’re largely indistinguishable to users.

I asked Friend how Carbonite will be affected if online backup comes to be seen as a commodity. “I hope it does become a commodity, because our view is that a really good backup service should have no features—it should just work,” he replied. Which means that for backup providers, “it just comes down to the issues of marketing and costs.” Customer acquisition is Carbonite’s key challenge right now, because the more people it can sign up, the greater the economies of scale in its data centers, and the higher the barriers to potential rivals, who would have to build equally large data centers to compete on cost.

That’s why the new funding round will go mainly toward growing the company’s data centers—for each new customer, Carbonite has to spend $15 to $20 on storage arrays, Friend says—and toward advertising (the company takes out spots on radio talk shows such as Rush Limbaugh, Howard Stern, and Bill O’Reilly) and cross-marketing arrangements like the Lenovo deal. Carbonite’s backup software is also pre-installed on Packard Bell computers sold in Europe.

“To the extent that this does become a commodity, it’s going to come down to brand,” Friend says. “If you have Carbonite and you have Mozy and they’re the same price, which one are you going to buy?” Carbonite’s strategy, he says, is to align itself with trusted brands and partners like Lenovo and Packard Bell. “If you survey people, one of the things they will ask when they hear about online backup is ‘How can I trust them with all my data?’” Friend says. The message of the company’s partnerships, he says, is “it’s real, it’s available, and a company like Lenovo says you can trust these guys.”

Currently, Carbonite’s user base numbers in the hundreds of thousands, and is tripling yearly, Friend says. That may exceed Mozy’s user base—third-party analysts cited by Carbonite say that the company has the leading share in the online backup market. “We want to be at a million paying subscribers sometime next year, and if any of these deals like the Lenovo deal work out, we could blow past that,” say Friend. “Once we get to 10 million, we will be the size of a McAfee, which is basically where we want to be. We want to be to online backup what a Norton or a McAfee is to antivirus—and anybody who is willing to pay $50 a year for antivirus software is probably going to be willing to pay $50 against the risk of losing all their data.”

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

Single Page Currently on Page: 1 2 previous page

By posting a comment, you agree to our terms and conditions.