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Veeam Sells Its N2WS Business Due To Government Concerns

'After some discussion with the U.S. government in the first half of 2019, Veeam voluntarily made the decision to sell N2WS to focus on developing a unified cloud platform. The sale of N2WS was completed recently,' the company said in a statement.

Data protection software vendor Veeam has sold its N2WS business, which it acquired less than two years ago, in response to U.S. government concerns.

Some of Veeam's channel partners see this as a good move because it removes a distraction for the Baar, Switzerland-based vendor.

Veeam acquired N2WS in early 2018 in a $42.5 million deal that gave Veeam what was then the largest provider of data protection for Amazon Web Services environments with full support for EC2/EBS, RDS, RedShift and Aurora. Veeam kept N2WS as a stand-alone business.

[Related: CRN Exclusive: Veeam CEO McKay Details Plans For N2WS Acquisition, Says He's 'Not Worried' About Dell EMC Integrating Data Protection Into VMware]

However, a big part of N2WS' business came from providing data protection on AWS, including on AWS GovCloud.

Veeam declined to provide details about the sale of its N2WS business, including who the buyer is or the value of the sale. However, a Veeam spokesperson told CRN via email that the company is planning to provide more details during the Microsoft Ignite conference scheduled for Nov. 4 to 8 in Orlando, Fla.

Veeam also emailed a statement to CRN that said, "Several months following Veeam’s announcement of the acquisition of N2WS in early 2018, the U.S. government had requested information regarding the transaction. After some discussion with the U.S. government in the first half of 2019, Veeam voluntarily made the decision to sell N2WS to focus on developing a unified cloud platform. The sale of N2WS was completed recently."

News of the sale was first reported by Blocks & Files.

Some Veeam channel partners said the sale of N2WS was the right move.

Solution providers with a large services business sort of compete with N2WS, which makes Veeam's selling of that business not a bad move for the channel, said Rocco Guerriero, CEO of Contour Data Solutions, a Doylestown, Pa.-based solution provider.

"Remember, the margins are not in the software," Guerriero told CRN. "They're in the services. And N2WS competed with some of our services."

Contour Data Solutions' Veeam relationship is strong, Guerriero said.

"We love the platform and love the software," he said. "As a developer of technology, we want Veeam to do well. We do a lot of R&D with the Veeam Cloud Connect platform and how it works with our customers. We've built our cloud automation platform with Veeam Cloud Connect to let customers do self-service."

Dan Timko, chief strategy officer for cloud backup at J2 Global, a Los Angeles-based IT services provider and Veeam channel partner, told CRN the sale is a smart play for Veeam given federal government concerns.

"Veeam is getting rid of a distraction," Timko said. "Veeam is a billion-dollar company. This is a smart move for Veeam."

Timko said Veeam's relationship with N2WS for AWS backups was not an issue for J2 Global, and J2 did not lose any customers because of that relationship.

However, he said he does understand how some partners might have been concerned about N2WS as a part of Veeam. "It's just the nature of the industry," he said. "People in our industry are fearful any time a vendor works closer with the hyper-scalers."

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