Interviews

posted on 01 July 2008 12:16

Sony is shipping Spare Backup software with its Vaio PCs to provide an online backup service to users of its PCs. That was a surprise announcement, coming out of the blue so to speak. We fired a few quick questions off to Cery Perle, Spare Backup's CEO, and got a few quick answers fired back.

B&F:How does Spare Backup view the online backup market?
Cery Perle: We view if very fragmented, no direct leadership in the market

B&F: Who are the main players and how do they market their products?

Cery Perle: We see Carbonite, and Mozy in the RFP’s, however Carbonite does not do white labels, we focus on a customized application for the wholesale market. Mozy is in the middle, and has the money to do a lot.

B&F: What are the main features and benefits of the Spare Backup offering?

Cery Perle: Spare Backup designs a custom application for our partners. We give them an a la cart menu and they pick and choose the feature sets they want for their clients.

B&F: How does this compare to EMC's Mozy? Different approach, they want a brand

Comment: I guess this applies to Seagate's eVault and the Symantec offering.

B&F: How will the online backup market develop?

Cery Perle: It will become commoditized as pricing drops, however that will not happen sometime soon as the market is very young, the data is the sticky point, and we are showing retention rates of 93%.

Comment: Spare Backup sent me a description of it attributed to the ChangeWave investing web site:-

To describe Spare Backup as "scrappy" is like saying Tiger Woods has a nice golf swing. These guys smell opportunity and they're going after it like there's no tomorrow. The online backup storage market for consumers and small businesses is still very fragmented, and no company is really demonstrating any leadership.

Amazingly, Spare is the only publicly traded pure play. What's more, it's got the top spot in its sights -- and it may get there by 2009!

Following its announcement last week that Spare's online backup service is now being bundled on all Sony VAIO PCs, Spare reported today that it's expanding its product line to the enterprise level. Its new service, Spare Corporate Protection, is a response to increased demand of the small business market and requests of current major partners including DSG International. These enterprise products now address a significantly larger market, which, according to Spare, should start to impact revenues in Q3.

The company said it's in the final phase of negotiations with "several large global partners." Clearly, these deals will not only increase cash flow, but also add tremendous credibility to Spare's name. All this is happening at the same time that Comcast will roll out (any day now) Spare's backup service in a soft launch to its customers -- followed by a full-scale marketing program to millions.

Based on our discussions with Spare's CEO, we understand there are several other catalysts in the pipeline in the coming weeks and months. If agreements continue to be nailed down at this pace, management will easily dwarf its conservative projections for 2009 revenues of $16 million to $24 million.

The emerging picture we're getting is of a company that will provide seamless backup services to consumers and businesses of all sizes -- and quick and simple access to any type of files on a range of devices, including PCs, home entertainment centers and mobile devices.

With Sony, Comcast and DSGI lined up, it's apparent that Spare is able to walk the walk. And we see even bigger and better things ahead.

Note. I don't own any stock in Spare Backup and am not intending to. This is NOT a recommendation to buy stock and only included here to fill out the picture that we're building up of Spare Backup and its gung ho nature.

Attention on backing up in the cloud tends to be focussed on the big name brands - Mozy, Carbonite, EVault, etc. The Spare Backup story is a reminder that there are many ways to skin a cat. Putting an online backup service on PCs could, like putting a default search service on PCs, build a big customer base quite quickly - and deny those customers to Carbonite, EVault, Mozy or any other branded cloud backup service provider. Why should users switch?

It's probable that other 'white label' backup services will come tumbling into the market. We might, for example, think about Carbonite, EVault or Mozy doing this to build up their own customer bases. Indeed Carbonite has struck a deal with Packard Bell.

So ... we could be seeing a landgrab for PC and notebook desktop real estate and the striking of claims to be the preferred online backup service provider under the hood. Watch Acer, Dell, HP, Lenovo and Toshiba jump - but not Apple; it's already got its Time Machine and other online services well planned already.

^{[Chris Mellor.]}