Breaking News

Tweet TWEET

Backup Veteran Asigra Keeps Calm as Competitors Crowd the Cloud

Two decades before such buzzwords as “cloud computing” and “software as a service” entered the lexicon, a small Toronto software maker called Asigra was helping companies back up their data to remote sites over telephone lines.

Now the growth of cloud computing -- using software and storing data over the Internet rather than on a company’s own computers -- and particularly online backup have propelled demand for Asigra’s software. The same trend means the 100-employee company, which had close to $50 million in revenue in 2010, faces new competition from rivals large and small.

Founder David Farajun started Asigra in 1986 after a hard-drive failure doomed his previous company, which was building an operating system. With few options to save and recover his own files, Farajun founded Asigra to fill a market need and help other companies avoid the same fate. His early clients would transmit their data, using 300 baud modems, to a secure vault, where Farajun had stacks of foot-long hard discs that could store 10 megabytes -- a huge amount of data in the 1980s, now about the equivalent of a few MP3 song files.

About two years into the business, with 32 backup clients, Farajun realized that few companies wanted to trust his unknown startup with their data. So he began to sell Asigra’s software to other computer service providers that already had relationships with companies needing to back up their data. “That’s when the whole business shifted,” says Eran Farajun, the founder’s 39-year-old son, who now serves as executive vice- president.

EXPANDING CLOUD

Today, hundreds of service providers use white-label versions of Asigra’s software to sell online backup services, from Hewlett Packard to Telecom Italia to CDW. The market for cloud backup services is about $2 billion and growing rapidly, estimates Rachel Dines, an analyst at Forrester research. Dines says online backup, originally considered a tool best suited for small businesses with few IT staff, is increasingly adopted by larger enterprises with offices and workers spanning the globe. “More and more companies realize that there’s critical data being stored on people’s PCs, and they go out into the world with their laptops, and they can lose them,” she says.

The growing demand means new companies are rushing in to offer online backups. “There are hundreds of cloud backup providers, and most of them have popped up in the past couple of years,” Dines says. Asigra is among the handful of online backup pioneers that is still around. “They were doing cloud backup before it was cloud backup,” says Dines.

Eran Farajun says Asigra’s competition comes from opposite ends of the spectrum. On one side are smaller backup startups that he says sell “weaker” software at a fraction of Asigra’s prices. On the other, such tech giants as IBM and Symantec that have strong brands may offer free or discounted backups to customers that buy other services.

SELECTIVE UPDATING

Asigra’s advantage is that it was “at the forefront of figuring out the most optimized way to copy and transfer data,” says Lauren Whitehouse, a senior analyst at IT researcher Enterprise Strategy Group in Milford, Mass. For example, while many backup programs will copy an entire file that has been updated since the most recent backup, Asigra’s will detect only those blocks of data within the file that need to be updated, reducing the amount of data that has to be moved over limited bandwidth.

The company has also remained focused on selling its software only to service providers, rather than providing backup services directly to businesses. That means it doesn’t have any data storage vaults of its own, and companies using its software may not even recognize the Asigra name.

The strategy carries the risk that Asigra could fall to better-known competitors, says Dines, the Forrester analyst. “The biggest risk is the lack of brand recognition. Because of the route they’ve taken, and [because] so many organizations are white-labeling their solution, they actually have huge market adoption and very, very little market awareness,” she says. Competitors such as backup provider Mozy won’t license their services unless the provider identifies it as “powered by Mozy,” Dines points out.

Farajun says the company is pushing to have more of its partners label their backups as “powered by Asigra” so the end users meet the brand. For now, demand has not let up. The company is hiring for 30 sales positions, and Farajun says Asigra’s revenue is growing by high-double digits. He sees the sudden growth in online backup as a boon and welcomes new entrants to the marketplace. “We thought, ‘Competition is wonderful,’ because it helps validate the idea and the concept,” he says.

To contact the report on this story: John Tozzi at jtozzi2@bloomberg.net

To contact the editor responsible for this story: Nick Leiber at nleiber@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.