Asigra's Path Forks

Asigra, a Toronto-based private company that has sold backup and restore software for 18 years without VC funding, is taking a new route with its distribution model (see They Don't Need No Stinkin' VCs and Asigra Backs Up Enterprises).

So why would a company that claims seven years of profitability and millions of recurring annual revenues from licensing change? Because the backup and recovery market demands it, says Asigra EVP Eran Farajun.

Asigra sells its product to storage service providers (SSPs) who include it in their backup packages. This method has put Asigra software anonymously in hundreds of installations worldwide, claims Farajun, but asserts that Asigra could increase its enterprise penetration by selling its branded software through resellers and hardware partners.

Over the last 15 months, we’re finding customers don’t always want services. They want to buy software,” Farajun says. “Enterprises want to be their own internal service provider. We said, ‘Why should we leave money on the table? Let’s tweak our licensing.’”

Today Asigra launched Asigra Televaulting for Enterprises, software that backs up data in remote sites and departments into a central archive in the data center. It's the same software Asigra sells through service providers, but the licensing model is different.Asigra has lined up resale partnerships for the new enterprise product with Network Appliance Inc. (Nasdaq: NTAP) and Sun Microsystems Inc. (Nasdaq: SUNW), and Farajun says he hopes to sign at least 60 resellers in North America by the end of the year. Where Asigra gets 85 percent of its revenue through SSPs, Farajun expects the company to eventually generate half of its revenue through resellers.

Asigra's new strategy is risky. It's bound to bang heads with the major backup software players, such as Veritas Software Corp. (Nasdaq: VRTS), EMC Corp. (NYSE: EMC) Legato, and Computer Associates International Inc. (CA) (NYSE: CA).

But analyst Mike Fisch thinks the big players won't be quaking. “This is an opportunity for [Asigra] to step on a larger stage and ramp up their business,” says Fisch, The Clipper Group's director of storage and networking. “But they are truly a niche – they’re bringing data in from remote sites. They’re not the whole solution. People will probably use them next to another backup package. They complement Veritas and Legato.”

One selling point could be price: Asigra Televaulting consists of client software at remote sites and system vault software in the data center. The client agents are free, and companies pay by the amount of capacity they back up. Asigra charges $56,000 for the first TByte and $7,500 for every subsequent TByte.

At least one analyst says this pricing's lower than that of other software companies. Farajun is blunt: “Software companies have been gouging customers for years."Regardless of how its new strategy pans out, Asigra probably won't repent of being a niche player with a cute price point. Farajun says the 35-person outfit expects to continue to stand on its own as a self-funded private company.

“We regularly get pitched by VCs,” Farujan says. “But they don’t offer us anything except money and we don’t need it.”

— Dave Raffo, Senior Editor, Byte and Switch