Seagate To Bring Storage Services To SMB VARs With EVault Buy

Seagate Technology's EVault acquisition turns up the heat in the data backup services space, where the hard drive kingpin will compete directly with companies like Iomega as well as VARs and MSPs offering backup solutions to small businesses.

In announcing the $185 million deal Thursday, Seagate also unveiled Seagate Services. The new group will use the EVault software as a platform for offering remote data backup services to small and midsize businesses via Seagate's global channel base, said Brian Dexheimer, chief sales and marketing officer at the Scotts Valley, Calif., company.

The move is an extension of Seagate's strategy to provide the IT market with more than disk drives, Dexheimer said. The company introduced direct-attach external backup drives about five years ago, and it expanded into the NAS space two years ago, he said. Last year, Seagate expanded its NAS offerings with the acquisition of Mirra, maker of the all-in-one Mirra Personal Server, which combines an intelligent network appliance, client software and Web services for remote data access.

"EVault stretches us even further into the SMB market," Dexheimer said. "It lets us start to manage the storage infrastructure for small businesses. We're after an underserved market."

Yet that market is becoming less underserved as a rising number of companies roll out small-business data backup services.

Solution providers such as Plymouth, Minn.-based Nexus Information Systems, for example, are developing their own storage service offerings. Others are partnering with storage service providers to bring backup services to midmarket and enterprise customers, and a crop of relative startups are turning to the channel to bring backup services to small businesses.

One of those small players, Atlanta-based eFolder, is happy to hear that Seagate is getting into the market, said John Williams, eFolder's founder. "Especially when we saw the number of [EVault] customers and the price paid," he said. "They paid $185 million for 8,500 customers. If that's how they value that business, then I'm worth a lot more than I thought I was."

Williams said eFolder has been profitable as a provider of backup services since the day it opened, thanks in part to the fact that larger storage vendors ignored this space until recently, giving companies like his the opportunity to grow. And that growth has come from the channel, he added.

"EFolder was founded by two accountants and two engineers," Williams said. "We know how to make money and how to build good technology. We just couldn't sell. That's why we went to the channel."

Seagate also faces competition from other storage vendors adding services. Iomega, for instance, purchased CSCI, a small San Diego-based MSP, in July and plans to use it as a platform for offering services -- including storage -- to its worldwide partner channel.

Dexheimer said Seagate plans to look first to its 60,000 global channel partners to bring its new services to small businesses after the acquisition closes, which will probably be in the first quarter of 2007. He said he expects about one-third of those partners to be interested in offering the services.

For now, EVault will continue to work with its own channel, and Seagate will evaluate those relationships in the future, Dexheimer said. But partners of EVault should not be concerned, he noted.

"We'll scale the business, but we won't dominate the market," Dexheimer said. "There will be other partnerships that will extend the reach of the technology."

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