Acronis' Potential for Growth in the Data Protection and Recovery Marketplace

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1 VENDOR PROFILE Acronis' Potential for Growth in the Data Protection and Recovery Marketplace Carla Arend IDC OPINION The storage software market is all set for recovery after a tough year, particularly for the hardware markets. The storage software market has proven more resilient and is forecast to grow at a 4.5% CAGR from 2010 to IDC believes this resilience is due to the fact that both businesses and private users are not willing to put their stored data at risk, whose volumes continue to grow rapidly. The storage software market is distinguished by the large number of players, from heavyweights down to local vendors. With a solid channel business and a focus on affordable backup and disaster recovery software for consumer and business users, Acronis stands as a vendor to watch in the storage software market. The company continues to extend its product portfolio and is determined to further penetrate the business and consumer markets. Omøgade 8 P.O.Box Copenhagen, Denmark P IDC believes that, like all other vendors in the storage arena, Acronis will have to be aware of the following trends that will shape the market in the future: Storage efficiency. Customers had a big focus on storage efficiency in 2009 and will continue to require more efficient storage solutions such as data deduplicaton and storage management. As data volumes continue to grow, storage efficiency remains highly relevant to customers. Online storage/cloud storage. As customers look to control their storage costs, they are increasingly open to new business models, such as storage as a service. Data protection software vendors are responding to this trend by offering their software as a service (SaaS), either direct or through partners, or by offering cloud storage as an alternative backup target to disk or tape. The storage-as-aservice market is forecast to grow faster than the storage software market overall, as it starts from a small base and customers often favor this approach in the current economic climate. Virtualization. Disaster recovery/backup are progressively converging with x86 virtualization, in that virtual machines (VMs) are used with increasing frequency as the standard source to execute disaster recovery plans, and companies such as Microsoft and VMware are developing application programming interfaces (APIs) for storage vendors to utilize in a disaster recovery context. Filing Information: December 2010, IDC #FB51S, Volume: 1, Tab: Vendors European Storage Software and Services: Vendor Profile

2 IN THIS VENDOR PROFILE This IDC Vendor Profile analyzes the software company Acronis and reviews its position in the data protection market. In addition, relevant industry dynamics are discussed and highlighted, and advice is provided for Acronis within the current competitive landscape. SITUATION OVERVIEW Acronis plays in the data protection and recovery software market, which is the most mature storage software market and is characterized by a high degree of saturation for backup software, but a surge in demand for new innovative features such as protection of virtualized environments, data deduplication, bare metal restore, and online backup (storage as a service). As data volumes continue to grow and an ever increasing number of devices are holding precious data, both in businesses and consumer households, demand for data protection will continue to increase. The data protection and recovery software market overall is forecast to grow 3.9% in 2010, and players in this market will need to lead with innovative technologies that increase efficiency, mitigate risk, improve disaster recovery capabilities, and bring down cost. IDC expects that competition in this market will be intense in 2010, as customers are starting to refresh their storage estates. Founded in 2002, Acronis is a privately owned company that offers backup and disaster recovery software based on patented disk imaging technology. In addition, Acronis has expanded its portfolio to cover virtualized environments and is extending its reach to online or cloud storage offerings as well. Acronis' line of products is aimed at both consumers and businesses, with the business segment growing stronger, pushed by corporate users that bring up the product to enterprises. Company Overview Acronis Inc. is a privately owned, eight-year-old company founded by the IT entrepreneur Serguei Beloussov in It focuses mainly on software products for backup and disaster recovery, addressing the needs of both consumer and business customers. Its core product line is Acronis Backup & Recovery 10, a disk imaging backup software that comes in different flavors for private users, SMBs/branch offices, and large server installations. More recently, Acronis has been extending its portfolio with products aimed at storage efficiency (data deduplication), security, virtualized environments, and cloud services. 2 #FB51S 2010 IDC

3 TABLE 1 Acronis Company Snapshot Category Company type Primary markets Details Privately owned software vendor Backup and disaster recovery software for consumers, SMBs, and enterprises Founding year 2002 Number of customers Acronis' installed customer base encompasses more than 175,000 businesses and over 2.5 million users of its consumer products CEO Company headquarters Global presence Web site Jason Donahue Woburn, MA, U.S. 17 offices across the world Source: IDC, 2010 Founded in 2002, Acronis has been expanding its business geographically through targeted investments in key countries, as well as a significant investment in the channel in Europe and Asia/Pacific. Through its direct and indirect channels, Acronis software is sold in more than 90 countries and available in 14 languages. Its marketing messages are centered on the concept of affordable backup, disaster recovery and security solutions, especially targeted at tech-savvy consumers, SMBs, and branch offices. Product Portfolio Acronis is a leading provider of easy-to-use backup, recovery, and security solutions for physical, virtual, and cloud environments. Its product portfolio is based on its patented disk imaging technology and bare metal restore technologies, which enable corporations, SMBs, and consumers to protect their digital assets independent of the hardware they are using. With Acronis' disaster recovery, deployment, and migration software, users protect their digital information, maintain business continuity, and reduce downtime. Within the latest releases of its products, Acronis has focused very much on the scalability of its solutions. Its product portfolio can be divided into two main categories, which are discussed in the succeeding sections. Business Solutions Acronis' flagship solution for enterprises is its Acronis Backup & Recovery 10 family, which is the successor of Acronis' True Image Echo product line. It covers workstation and server backup and disaster recovery processes in Windows and Linux environments and across physical and virtual platforms. The product handles both 2010 IDC #FB51S 3

4 image-level and file-level backup and restore. It can also be used for migration and deployments. The Acronis Backup & Recovery 10 product family comprises several special editions and add-ons: Virtual Edition supports several virtual environments (e.g., VMware, MS Hyper- V, Xen server, and Parallels), provides agent-less deployment on the host, and provides single management in both physical and virtual environments. Acronis Backup & Recovery 10 Online is a fast, secure, and cost-efficient offsite data protection service that works like a remote datacenter, but without the high price tag. It is integrated with Acronis Backup & Recovery 10 and can be managed from the same console. With the combination of Acronis Backup & Recovery 10 and the new online offering, customers can manage all of their backup and recovery efforts regardless of the data s actual location, be it physical, virtual, or cloud. Acronis Backup & Recovery 10 Deduplication Add-on is a module that can be activated. It provides integrated inline software-based deduplication, either at the source or at the target, and both at block and file levels. Acronis Backup & Recovery 10 Universal Restore enables customers to restore to dissimilar hardware. Acronis Recovery for Microsoft Exchange provides granular restore from the database level, allowing for recovery of information stores, individual storage groups, mailboxes or specific s. Acronis Recovery for Microsoft SQL Server enables customers to recover in an automated fashion to the point-of-failure of their SQL database. Disk Partitioning products include Acronis Disk Director 11 Advanced Workstation and Acronis Disk Director 11 Advanced Server Database Recovery tools include specific products optimized for disaster recovery for Microsoft environments: Acronis Recovery for Microsoft Exchange Acronis Recovery for MS SQL Server Deployment Tools include the following: Acronis Snap Deploy 3 for Server creates disk images of the whole stack OS and the application and replicates them, making client or server deployment faster. Acronis Snap Deploy 3 for PCs and Workstations utilizes Acronis' drive imaging technology, creates an exact disk image of the standard configuration, including the operating system and all applications, which it then deploys to multiple systems simultaneously. Acronis is constantly developing these products, and has recently put particular focus on scalability and management, optimization for virtualized environments, and software-based deduplication. 4 #FB51S 2010 IDC

5 Home User Solutions Acronis True Image is Acronis' extensive product line for home and home office users. It is also based on Acronis' disk imaging technology, and provides easy-to-use backup and restore to home users. Most recently, this product offering has been complemented with an online storage option, Acronis Online Backup, which enables customers to send their backup to a secure offsite location. In 2010, Acronis launched a subscription-based SaaS offering, Acronis Backup and Security 2010, to complement its traditional sold upfront licensing model. The product family comprises the following offerings: Acronis True Image Home 2011 and Acronis True Image Home 2011 Plus Pack Acronis True Image Home 2011 Netbook Edition Acronis Online Backup Acronis Disk Director 11 Home Acronis Backup and Security 2010 Acronis Internet Security Suite 2010 Acronis AntiVirus 2010 Acronis Migrate Easy 7.0 Company Strategy Acronis developed a traditional ISV business model. Revenues come from software licenses distributed via retail, channel resellers, or Web sales. A smaller portion of the business flows through OEM agreements, mainly with consumer storage hardware vendors embedding and rebranding the software products in bundle with their hardware. Acronis' business is mainly based on its SMB and enterprise products, accounting for over 80% of its revenue, with consumer products representing less than 20% of revenue. Within business-to-business (B2B) revenue, the largest part comes from SMBs, and server and PC products have comparable shares of the total. The company follows a volume-sale strategy, leveraging low average sales values (ASVs) compared with the respective products of larger competitors and trying to make the most of the consumerization effect that drives tech-savvy private users to bring up products and brands from the consumer space into the enterprise. This bottom-up dynamic has led Acronis to have good penetration in branch offices and midsize businesses that do not need high-end, high-capex backup products. Also, it led it to a natural focus in common, Windows-populated environments, both on the server side (MS Exchange, SBS, WS2008, and workstation environments) and on the desktop side, although Linux is also covered in some enterprise server products IDC #FB51S 5

6 Acronis' main competitor in the backup marketplace is Symantec, which is the only vendor with a comparable bare metal restore product for the midmarket. Other vendors in the broader data protection and recovery market include EMC, IBM, HP, CA, CommVault, Atempo, and Bakbone. Acronis' approach is quite pragmatic, as the vendor concentrates on consumers, SMBs, and single departments within wider enterprises, avoiding competing directly on large corporate-level deals that would require wider and highly integrated environments. In 2010, Acronis has complemented its traditional ISV model by launching subscription-based SaaS offerings for consumers, which cover both backup and security. Acronis will leverage its SaaS capabilities into the SMB/enterprise space in the foreseeable future. Virtualization Mainstream adoption of server virtualization in test and development environments and production environments has created a vast opportunity for storage vendors, as server virtualization has created an additional layer of complexity in terms of data management and data protection. IDC observes that storage vendors are responding to the storage dynamics created by increasing mainstream adoption of server virtualization in many different ways, for example: To integrate with the storage APIs that VMware provides to ease the storage burden for its customers To automate and simplify the backup process for virtual machines by providing host-based backup instead of backup for each virtual machine To support customers in the migration process to and from physical and virtual machines To offer data deduplication technologies to shrink the data footprint of virtual machine before backup or migration for increased storage efficiency To use virtual machines as target objects for replicated data, for example, in a disaster recovery scenario To increase the total addressable market for shared storage (e.g., storage area network [SAN], network-attached storage [NAS]), as virtualized server environments need shared storage to make the most of live migration capabilities To offer shared storage systems that are managed by virtual appliances, i.e., VMs preloaded with storage management software and behaving as though they were physical storage controllers Acronis understood the data protection opportunity in virtualized server environments early on, and covers the first five points mentioned above. It supports four of the main x86 server virtualization platforms (VMware, Microsoft, Citrix, and Parallels), allowing the execution of clone copies from and to VMs. In the virtualization space, Acronis is competing with storage vendors like Symantec, EMC, IBM, CA, HP, and NetApp, among others, which can offer similar capabilities. 6 #FB51S 2010 IDC

7 However, most of these vendors are addressing the large enterprise segment, whereas Acronis is focusing on the SMB market. Cloud Storage SaaS and cloud-based IT business and delivery models are currently emerging, and businesses are evaluating and testing the viability and fit of these concepts. There is no doubt that IT operations in the future will have a percentage of cloud-based services as part of their IT portfolios, and the storage market is no exception to that trend. There are two basic ways in which storage vendors are responding to the cloud storage trend: Provide raw storage capacity "in the cloud," which can be accessed over the Internet and provide additional storage capacity to customers, which is located in the provider's datacenter Provide backup, archiving, and management SaaS, so that customers do not need to install storage software on premises, but rather subscribe to a backup service and access the software over the Internet The first stage of Acronis' cloud storage offerings is targeted at the consumer market, and covers both aspects mentioned above. Acronis Online Backup offers consumers online storage space and the possibility to protect their data at a remote location. This offering is complementary to the Acronis True Image Home 2011 product, which manages the backups at home. On the other hand, Acronis Backup and Security 2010 is a SaaS offering, where customers get backup and security software through a subscription service over the Internet. This product does not only manage the local backup but also offers online storage space. Acronis has just released a cloud storage offering for the business market. By complementing its existing on-premises software products with a cloud offering, Acronis enables its current installed base to take advantage of the expected cloud benefits in a nondisruptive fashion, as they continue to manage both local and online storage from their familiar on-premises software. The cloud storage market is still emerging, and no clear leaders are established, particularly in the European market, so that any vendor entering the market at this point has a level playing field in front of them, especially those with a strong install base. Thus, IDC believes that Acronis is well positioned to capitalize on the cloud storage evolution. Storage Efficiency Another trend that has been emerging over the past two years is the focus on storage efficiency, particularly data deduplication as a means to reduce a company's storage footprint and to reduce a dataset that needs to be sent over the Internet. Acronis launched its software-based deduplication module in IDC #FB51S 7

8 Leadership After having been led for three years by Walter Scott, Acronis elected Jason Donahue as CEO in September Donahue is former CEO of a number of startups and infrastructure software and managed services companies such as Apptix, Ejasent Meiosys, and ClearApp, which he left after the Oracle acquisition. Donahue is supported by an experienced board of directors, including founder Serguei Beloussov, who is also CEO of Parallels, and Jack and Ilya Zubarev, also part of the Parallels executive team. Michael Triplett, Ravi Jacob, and Scott Maxwell, all working for venture capital firms, complete the board of directors. Financial Aspects Acronis is, on the whole, a self-sustained business. In 2004, it accepted a $10 million investment from Insight Venture Partners, a private venture capital firm with a history of financing software houses and Web companies. The company has been profitable since its early days. FUTURE OUTLOOK The current economic outlook is still cautious and IDC expects a slow and drawnout recovery from the economic crisis, but storage software and particularly data protection and recovery software is one of the more resilient segments in the IT industry, as customers rely to an even greater degree on their data to make better business decisions and continue to invest in disaster recovery and business continuity solutions. The storage software market is benefitting from a speedy recovery in the hardware markets, where customers are investing in technology refresh projects in PC, server, and storage after "sweating" their hardware assets for the past couple of years. Storage efficiency solutions, virtualization, and cloud storage are going to pick up speed and will drive growth in the data protection and recovery software market. Challenges IDC believes that one challenge for Acronis is to further penetrate the business market for data protection by recruiting resellers and raising brand awareness. As Acronis moves beyond its sweet spot in the consumer and SMB markets, it will meet fiercer competition from the midmarket and high-end storage software vendors which are trying to move down-market with their offerings. Another challenge for Acronis is to compete effectively against Symantec, which has capabilities that are similar to those of Acronis as part of a broad storage and security portfolio. Symantec is also well established in the midrange data protection market with Backup Exec, and has a broad and loyal customer base. Lastly, Acronis is entering the highly fragmented cloud storage market and will need to educate the market on the benefits of cloud storage and help overcome the security and privacy concerns that customers might have. 8 #FB51S 2010 IDC

9 Opportunities Acronis' opportunities are plentiful. The company is already operating in one of the most resilient segments in the storage industry, and there are many opportunities in the storage market that Acronis could take advantage of. Storage as a service or cloud storage is a market segment that is forecast to grow better than the overall storage market in the future, as this business and delivery model is maturing. This is an opportunity for Acronis to add another route to market to its traditional volume business based software license sales, either by targeting the service provider segment or by providing a service itself. Acronis has already been successful in delivering these services to consumers, and is now entering the online backup and recovery market for SMBs one year later with a tested and proven solution. The opportunities for Acronis are in upselling the service to its existing install base and in capturing new customers with this service offering. Expand data protection portfolio for virtualized servers. Acronis already has a strong product for the protection of virtualized servers. However, as end users are increasingly using virtualized servers in production environments, the storage challenges arising at the back end will only increase, thus providing plenty of opportunities for storage software vendors to bring innovative products to market. Acronis is a very cash-rich company due to its careful expansion strategy and constant focus on cash flow and cash generation. This potentially provides an opportunity for Acronis to acquire innovative technology or invest in the channel to diversify the product portfolio and penetrate the market further. ESSENTIAL GUIDANCE Advice for Acronis IDC believes that Acronis is positioned to fare well in the future and provides the following pieces of advice for Acronis to capitalize on its market opportunity: Extend OEM deals on consumer storage devices to increase visibility and empower market expansion. Pursue OEM deals on laptops to penetrate the market further. Expand its product portfolio for the storage-as-a-service or cloud storage market. Acronis could either expand its own offering for this market or enable partners to offer storage as a service. Diversify its product portfolio into adjacent storage markets and increase focus on the protection of virtualized environments, as this continues to be a hotspot IDC #FB51S 9

10 LEARN MORE Related Research Worldwide Data Protection and Recovery Software Forecast: Cloud, Deduplication, and Virtualization Stabilize Market (IDC #224526, August 2010) Worldwide Data Protection and Recovery Software 2009 Vendor Shares (IDC #223755, June 2010) IDC's Worldwide Disk-Based Data Protection, Continuity, and Recovery Taxonomy, 2009 (IDC #221256, December 2009) Infrastructure Software Adoption and Vendor Criteria (IDC #AP322307S, August 2009) Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2010 IDC. Reproduction is forbidden unless authorized. All rights reserved. 10 #FB51S 2010 IDC