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Analysis

Veeam dreams of $1Bn revenue as it releases Backup V7
Peter Williams By: Peter Williams, Practice Leader - IT Infrastructure Mgmt., Bloor Research
Published: 20th August 2013
Copyright Bloor Research © 2013
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Veeam has released version seven of its backup and replication software built entirely for virtual environments, only 5½ years after version one appeared. In its short history the company has achieved fantastic growth by carving its own niche in a market which had many players.

The privately-held data protection (DP), storage and virtual infrastructure specialist is laser-focused on the two leading hypervisors, VMware and Hyper-V, completely ignoring non-virtual environments in which the other DP vendors are well-entrenched.

The new release builds in its own WAN acceleration to achieve higher performance for remote replication and recovery, high-performance backup from snapshots, the new Veeam Explorer for Microsoft SharePoint and Virtual Lab for Hyper-V and for replicas.

The no debt, cash-flow positive company has also set itself a very ambitious target - to grow in the high-end market and reach $1Bn turnover at breakneck speed. As part of this, it has brought in VC firm Insight Partners to look at how its product set might be extended. Right now it has over 73,000 customers - up from 52,000 in 2012 and on course for 93,000 by year-end - of which nearly 800 are in the global 2000 and over 440 in the Fortune 500; this makes it the fastest-growing backup software ever with current annual revenues of around $200m.

So it is doing well, but still has a long way to go to meet that target.

Doug Hazelman, Veeam's VP of product strategy, acknowledged that this was very ambitious but explained to me some of the reasons why it was nevertheless achievable. "Customers have other backup solutions, but consolidation [of their applications] usually means an agent with every VM [virtual machine], so they are re-thinking," he said, adding "Current backup vendors are having to re-architect [their offerings]."

Right now about 60% of users may have virtualised environments and one survey estimates this will rise to 80% by 2016. However, many of these still have non-virtualised applications as well (although a stand-alone application can be treated as virtualised). Hazelman said that companies with mixed environments typically continue to use the incumbent DP solution for non-virtualised work but replace it with Veeam for virtualised storage - which is where Veeam has no direct competitors right now.

Veeam also operates entirely through the channel, with 19,000 partners worldwide. Its own staff number about 1,000 globally, comprising R&D, support, Q&A testing and inside sales; about 150-200 of these are involved in its ProPartner programme, providing channel training (alongside "Veeam University" on-line training) and certification for sales and technical channel personnel.

Having started with a clean sheet focusing entirely on the virtual market its software is unsurprisingly easier to use than its competitors who must address the physical as well. It has long had a VMware management pack to provide monitoring and reporting in this environment - but geared especially to its own DP software. Hazelman said there were no plans to turn this into a generalised product (where it would compete with established players in a crowded marketplace).

Conversely, the company is looking at acquisitions to broaden its portfolio into adjacent market segments, with archiving and e-discovery possibilities - but not full-blown DR mirroring, as it believes the fast remote replication it already provides is sufficient for most at a fraction of the cost. It already has a cloud edition, and this so far works with 15 different public clouds.

More specifically, virtualised storage comes in many proprietary guises, and all companies have their own APIs. Right now the software talks to storage through the hypervisor but, beginning with v7, storage snapshots can be made directly to the LUN to boost performance. Veeam now has a special HP storage (Lefthand and 3PAR) interface for the same reason, and other such deals may follow.

Earlier this year Veeam rolled out new marketing messaging under the banner "Modern Data Protection". This is to sell its strengths of being built specifically for virtualisation and being powerful, easy-to-use and affordable.

Hazelman told me "V7 is taking Modern Data Protection to the next level. It represents over 18 months of development effort by one of the best R&D teams in the world. Each time we release a major new version you can count on three things: innovation, features and performance. V7 certainly has all three."

Nevertheless, there are hefty competitors to take on at the high end - EMC, CA and Symantec in particular. Others who may become stronger in time could be Dell (through its Quest acquisition) and VMware itself through EMC bringing in data protection technology with its VDP product. Hazelman admitted that, "As a result [of the VDP release] we stalled last year, but came through again when people looked at this more closely."

That minor hiccup being behind, Hazelman saw "Managing our growth" as among Veeam's biggest challenges, but he added, "The VC is going to help us take the company to the next level."

Veeam is certainly not your typical IT software business. For instance it was founded by two Russians and is now headquartered in Switzerland. "The channel is very mature in Europe so we were able to slide in with VMware," said Hazelman. It also gives them a language edge with Veeam careful to have local people in every country. It is located all over the place, but the bulk comes from 40% in EMEA and 35% in North America. It has already hired staff to build up in Latin America and has an office in Australia for Asia-Pac (but is resolving some language issues ahead of trying to penetrate China, Japan and South Korea).

This alone shows an aggressive attitude to growth. So I for one will be watching to see Veeam continue its spectacular rise - unless a worthy competitor appears to cause it to stall again.

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Published by: IT Analysis Communications Ltd.
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