Paths of Carbonite and Mozy “Come Full Circle” in Data Backup Deal

Xconomy Boston — 

[Updated 2/27/18, 2:29 pm. See below.] Before Dropbox and Google Drive, there was Carbonite and Mozy.

Both of those pioneer firms launched in 2005, and were among the early players in online data backup services. They enabled people to pay a few bucks a month for software that automatically encrypts the information on their hard drives, and copies it to remote servers. (Box was also founded in 2005, Dropbox was born in 2007, and Google launched its Drive file backup service in 2012.)

Carbonite and Mozy took different paths after their launch. EMC (now owned by Dell Technologies) acquired Mozy—which was operated by Utah-based Berkeley Data Systems—in 2007 for a reported $76 million. Meanwhile, Boston-based Carbonite (NASDAQ: CARB) went public in 2011.

Now, the competitors’ paths have converged. Carbonite announced Tuesday it has agreed to buy Mozy from Dell for $145.8 million. The deal is expected to close in the first quarter of this year.

The connections between the two companies aren’t lost on Carbonite’s executives.

“It’s sort of funny how we were both founded at the same time,” says Norman Guadagno, Carbonite’s senior vice president of marketing, in a phone interview with Xconomy. There’s “this opportunity for us to now come full circle.”

When Mozy and Carbonite got started, it was a somewhat simpler time, says Guadagno (pictured above).

“The explosion of data, the explosion of daily hacks, the explosion of [cyber] threats—those hadn’t become mainstream yet,” he says. Now, those realities make data protection essential for individuals and businesses, he adds.

Carbonite shifted its strategy a few years ago to focus mainly on selling to businesses and organizations. Business customers now make up more than 70 percent of Carbonite’s revenues, with the rest coming from sales to consumers, Guadagno says. Carbonite generated $239.5 million in revenue in 2017, up from $207 million the previous year.

The company has also expanded its offerings beyond automatic data backups, to include tools for securing data on endpoint devices, enabling more rapid recovery of files, and migrating data between cloud services and other sources, among other capabilities. Carbonite has made a series of acquisitions in recent years; the Mozy purchase would be its largest deal to date, a spokeswoman says. [Spokeswoman comment added.—Eds.]

Mozy still primarily offers data backup services. It counts more than 35,000 businesses and 100,000 individuals as customers, Guadagno says. Carbonite sees an opportunity to “cross-sell and up-sell” Mozy customers on Carbonite’s wider breadth of products and services, he adds.

“Backup is only part of the story,” Guadagno says. “We see an opportunity with this customer base to introduce them to the platform approach to data protection.”

The proposed deal also speaks to the continued growth and evolution of cloud computing, Guadagno says.

“Even given the massive growth in public cloud providers, and private clouds, and tools and services like ours that use the cloud, I think it’s just the beginning,” Guadagno says. “We’re still just starting to get a feel for how fundamentally altering the cloud has become for businesses.”