Iron Mountain Lands LiveVault

In a move that validates the growing popularity of online backup services, Iron Mountain today announced plans to finalize the purchase of LiveVault within the next few days. (See Iron Mountain to Buy LiveVault.)

But it remains to be seen just how the move will play out for IT pros in small- to medium-sized businesses who seek these kinds of services.

Iron Mountain will shell out $42 million for the remaining 86 percent of of LiveVault it doesn't already own. The total value of the deal is about $50 million, officials say.

Iron Mountain dominates the market for manual records management and archiving -- via tape, vaults, trucks, and shredders. But the growing vulnerability of off-site archiving, which has given Iron Mountain unwanted publicity in recent months, plus the increasingly lucrative market for online services like LiveVault's, has the company focused on going more digital. (See Iron Mountain Keeps Truckin' and Iron Mountain Gets Connected.)

"This acquisition is about growing a tremendous opportunity," says John Clancy, executive VP of Iron Mountain's digital services unit.The market opportunity Clancy refers to is one an increasing number of IT pros, chiefly in companies too small to run their own elaborate backup schemes, are creating as they seek relief from the stress of ensuring that larger-than-ever volumes of data are preserved for future reference and restoral in the event of a disaster. According to the latest Byte and Switch Insider report, the popularity of these services is demonstrated by customers' willingess to pay a premium for them. (See Online Backup Services: Weighing Their Worth.)

So far, it's been a fairly limited market. LiveVault, along with competitors Amerivault, Arsenal Digital, and Evault, have been able to dominate through licensing arrangements with bigger players -- like Iron Mountain -- while maintaining their autonomy.

Now, at least one of LiveVault's customers is concerned that LiveVault will lose the quality of its service as it's absorbed into the enormity of Iron Mountain. "I have mixed thoughts," said Thurston Poole, senior network administrator at Northwest Corporate Federal Credit Union in Portland, Ore. "LiveVault is a big company, but Iron Mountain is even bigger. You can lose a certain amount of one-on-one customer service."

Another concern for customers is whether some of the high-profile LiveVault licensees, including Hewlett-Packard, will stay on board, thereby ensuring service continuity. While Iron Mountain expects them to, at press time, HP hadn't responded to the question. Another licensee, IBM, has softpeddled its LiveVault-based services and doesn't offer them except as part of a larger suite of corporate consulting and outsourcing options, so it's unlikely much will change.

There are rafts of LiveVault customers, however, waiting to see what will happen. LiveVault claims to have grown its business over 100 percent in 2005, supporting 2,000 corporate clients via 6 petabytes of data in the company's online vaults, of which there are 7 worldwide. The company plans to realize a bit more than $10 million in revenues this quarter.Digital services, largely based on LiveVault's facilities, will represent about $80 million to $90 million in revenues for Iron Mountain in 2005, officials say. Back in June, they claimed that 1,000 corporate customers in 70 countries signed on for 9 petabytes of digital facilities, which just rolled out this year.

While there is overlap in LiveVault and Iron Mountain's respective figures, it's tough to size it up. Details, including guidance and sales projections, will be offered at an investor conference December 7, Iron Mountain officials say.

Iron Mountain plans to retain LiveVault's 60 employees. But one, CEO Bob Cramer, says he'll be moving on. "I want to ensure this transition works perfectly," he says. He hasn't given much thought to what he'll do after that.

One thing: Iron Mountain, which has 14,700 employees worldwide, including 350 in its digital services unit, won't need to relocate anyone; its digital services unit outside Iron Mountain's Boston headquarters is just a few miles from LiveVault's HQ in Marlborough, Mass.

Mary Jander, Site Editor, Byte and SwitchOrganizations mentioned in this article: