Carbonite Looks To Mozy Acquisition For New Growth Opportunities, Channel Expansion
Cloud-based storage vendor Carbonite's $146 million planned acquisition of rival Mozy from Dell Technologies will create new opportunities for channel partners from both companies, according to Carbonite executives.
Boston-based Carbonite, which unveiled the planned acquisition of Mozy during its fiscal year 2017 financial analyst call, said the deal is expected to close sometime late in the first quarter of 2018 after regulatory issues have been cleared.
Carbonite is financing the deal through a combination of cash on hand and a $120 million revolving debt facility.
Mozy, was founded in 2005 and was acquired by EMC in 2007. It became part of Dell when Dell bought EMC in 2016. Both Mozy and Carbonite started as consumer-focused cloud-based storage companies, but have since evolved to where the business segments and channel partnerships form the bulk of their businesses.
Mohamad Ali, president and CEO of Carbonite, said during the conference call that Mozy has about 35,000 business customers and over 2,000 channel partners. "Both of [those] are great new audiences for us to cross-sell components of Carbonite's data protection platform," he said.
"I don't know if I've shared this before, but [Mozy] is the first company I wanted to acquire when I got here three years ago and we were patient and we waited," Ali said. "Three years later, the asset came on the market and we were there, ready to do the deal."
Carbonite in August acquired Code42’s CrashPlan for Home business to expand its consumer business.
Carbonite early last year acquired the Double-Take Software assets of Vision Solutions in a move to bring its channel partners new offerings related to high-availability and data migration.
The company in late 2015 acquired the disaster recovery and business continuity business of EVault from Seagate. That gave Carbonite the EVault Cloud Backup and Recovery software-only solution for server backups; the EVault Backup and Recovery Appliance, which brings the EVault to an appliance sitting at a customer's site; and EVault Cloud Resiliency Services for managing failovers into the cloud.
A couple months prior to the EVault acquisition, Carbonite's purchased intellectual property and hired engineers from Rebit to gain access to patents it uses in its cloud storage offerings.
"Today, we have one of the leading data protection platforms for businesses, with solutions that cover all of an organization's most critical data," Ali said. "We have disaster recovery, high availability, mail archiving, workload migration, and, of course, backup solutions for businesses of all sizes."
Mozy, on the other hand, brings Carbonite and its channel partners a new SMB customer base which has enjoyed Mozy's endpoint data protection technology but has not had access to a portfolio like that of Carbonite, said Anthony Folger, Carbonite's chief financial officer.
It also brings Carbonite a new relationship with Dell Technologies, Folger told the financial analysts.
"We're excited about the cross-sell opportunities, the opportunity to expose new partners to the full Carbonite data protection platform, and the strategic relationship that we're establishing with Dell, and believe this acquisition can be truly transformative for Carbonite," he said.
There are indeed new opportunities to follow once Carbonite closes the Mozy deal, said David Levenson, owner of Creative Computer Consulting, a Framingham, Mass.-based solution provider and MSP and Carbonite channel partner.
"The two have been competing with each other," Levenson told CRN. "Both have good products. But with Carbonite, customers get a whole suite of products, and we can use it to move customers from one product to the next as they grow."
Despite the opportunities, Levenson said he is in a way sad to see Mozy disappear.
"I hate to see competitors leave the market," he said. "The competition keeps prices under control."
Norman Guadagno, senior vice president of Carbonite, said there are some overlaps between Carbonite's and Mozy's customer and partner base, but that he can't yet be specific because the acquisition has yet to close.
However, Carbonite has seen Mozy compete in a lot of SMB accounts, especially in the endpoint protection space, Guadagno told CRN.
"We know many of our channel partners see them and other competitors," he said. "But Carbonite offers backup, disaster recovery, availability, and other services, but we've seen Mozy only for endpoint protection. Carbonite is differentiated by the breadth of our platform within our wider portfolio."
The real opportunity for Carbonite from the Mozy acquisition lies in Mozy's 35,000 business and 100,000 consumer customers, Guadagno said.
"All of them are ripe to moving beyond the one solution Mozy offered to a wider portfolio of offerings," he said. "A lot of businesses have backup, but that doesn't really protect all their data. As customers move to disaster recovery to reduce risk, we will see the Mozy acquisition as a great win."
Guadagno acknowledged, however, that the acquisition of Mozy really does little to lessen the competitive nature of the data protection market. He said Carbonite sees a wide variety of competitors, depending on which part of the market is being discussed.
These include Datto, Unitrends, and Veeam in the server backup market; Backblaze, iDrive, Jungle Disk, and Mozy in the consumer backup market; and Zerto and Veeam in the availability market, he said.
Ali, responding to questions from financial analysts, said that because of EMC's early acquisition of Mozy, Mozy entered the business market faster than Carbonite did, and now derives about 85 percent of its bookings from businesses.
"These 35,000 [business] customers represented an opportunity for us to sell additional products, server backup, DRaaS (disaster recovery-as-a-service) migration into that base," he said. "It's a tremendous opportunity."
However, Folger said, Mozy's overall business, while enjoying solid operating margins that were higher than Carbonite's, was starting to slide.
"The business was slightly declining, so it wasn't really a growth asset," he said. "And that probably was deliberate and by design within a bigger strategic enterprise. You can tell we're thrilled about the deal. We see a ton of potential and a ton of synergy, especially with the customer bases and our ability to cross-sell."