Online backup company Carbonite announced that it had raised another $20M in a 6th round; to date it has raised a total of $67M. Crosslink Capital led the round while CommonAngels, Menlo Ventures, and Performance Equity (Stamford) also participated in the round.
This is an interesting play by Crosslink. Carbonite, and all of the online backup vendors, are seeing competition from two fundamental trends. One of these trends is the emergence of online storage vendors like DropBox, Box.net, and SkyDrive. The other of the trends is the fundamental technology trend of the relative acceleration of storage size and density when compared to WAN capabilities.
Online storage companies are betting that they can beat the online backup companies because they make backup no longer necessary. This messaging and direction works as long as the online storage company maintains its image as a completely reliable data store. Of course, the differentiation between the online backup companies and online storage companies is that the online backup companies are a secondary line of defense against on-premise failure. The trouble is that the online backup companies can’t attack the reliability of the cloud-based online storage companies without raising the troubling issue of cloud-based reliability.
With Microsoft and Google emerging as players in online storage, expect the online backup vendors to get increasingly squeezed from the overall online storage trend.
At the same time all of this is occurring, online backup and online storage faces the daunting fact that the WAN (the Internet in the public case) has a relatively slow increase in performance and price/performance when compared to local storage. After all, we’re talking about a 1TB 7200RPM SATA drive costing less than $100 these day – and restoring that 1TB over a cable, DSL, or even T1 link can take weeks and months to perform. Thus it’s clear that while online backup and online storage are great technologies for small amounts of data, that there has to be some degree of on-premise assistance in order to accelerate backup and recovery.
Now, I have a bias here. I work for a company that builds backup appliances that solve this problem. But this is a bit circular – the reason I work for a backup appliance company is because of this gap between cheap and fast local storage and the relatively slow increase in performance and price/performance of WANs.
Online backup and online storage aren’t competitors to backup appliance vendors. If you only have a few gigabytes, or a few tens of gigabytes, to backup – online backup and storage are great solutions. When you need to backup hundreds of gigabytes and more, and you need the data back in less than weeks, you have to go to some type of on-premise backup solution.
By the way, there are a lot of blogs that are focused on online backup and online storage — here are a few I read: