Dell May Roll Out Services

Rumor has it Dell Inc. (Nasdaq: DELL) is considering a move into online backup services in an effort to mine a growing niche with SMBs.

While Dell spokespeople hadn't responded to requests for comment at press time, at least two industry sources, who asked not to be named, say Dell has been evaluating the potential market. The idea is that Dell would offer business customers disk-based, incremental backup capabilities as part of a managed service.

A similar offering from Hewlett-Packard Co. (NYSE: HPQ) recently debuted. HP's Electronic Vaulting service uses software from Asigra Inc. to enable customers to back up incrementally to remote disk-based storage, either HP's or the customer's own (see HP Bundles Up With MS).

An HP spokeswoman says the company has 70 sites worldwide ready to accommodate the online backups.

Online backup services give customers, especially smaller companies, the means to tap disk-based backup without paying for new equipment and security. It's a segment that's growing, as interest in disk-based backup takes root."Why not use disk to disk as a hosted model?" says Scott Bush, marketing director at AmeriVault Corp., which has offered backup services since 1998. "Smaller companies don't need to alter their existing infrastructure and they can also have the benefit of security and climate control."

Dell's established customer base of SMBs could give it special traction. "It makes sense. Dell's bread and butter are SMBs. These are companies that can't afford their own recovery sites," says analyst Greg Shultz of the Evaluator Group.

"If this happened, it would not surprise me one bit," says Arun Taneja of the Taneja Group consultancy. While the original storage service provider model failed because its focus was on outsourcing primary storage, he says, backup is another matter, and the market's "alive and kicking."

The online backup market has been growing, albeit faster for some firms than others. Companies in the segment, such as AmeriVault Corp., Arsenal Digital Solutions Worldwide Inc., and LiveVault Corp., report ongoing growth.

Since November 2004, AmeriVault and Arsenal Digital claim to have added 50 customers, bringing their totals to 550 and 900 customers apiece, respectively. LiveVault says it's grown its customer base from 1,500 to 2,000 customers in that time -- including IBM Corp. (NYSE: IBM), which quietly released a service in March 2005 based on LiveVault's facilities (see IBM Dives Into Online Backup). Additionaly, Arsenal Digital quietly garnered $15 million in new funding since last fall.Table 1: Selected Online Backup Service Providers

Despite this activity, Dell may choose to move cautiously. At least one industry source says demand for online backup is robust, but service providers aren't connecting with customers the way they should. If they did, there would be more revenue and more players.

Perhaps that's starting to change.

Mary Jander, Site Editor, Byte and Switch