Symantec Acquires Online Backup Service
The security and storage company picks up SwapDrive for a reported $123 million.Symantec June 10 announced that it has joined the ranks of IT companies investing in online backup services. The company acquired SwapDrive, a privately held online storage company, for terms that were not officially announced. However, an industry and financial analyst who asked not to be identified told eWEEK that the price was approximately $123 million.
TechCrunch.com industry analyst Erik Schonfeld also reported the $123 million figure, citing a source "close to the company."
"Symantec acquired SwapDrive to strengthen the services offerings in the Norton consumer portfolio and to help consumers manage data across their devices," Symantec spokesperson Mike Bradshaw said in a statement. "This was a small, targeted acquisition and is a very natural move for us because of our close two-year OEM relationship and existing product partnership on Norton 360."
Norton 360 is a subscription-based service that protects up to three home PCs by verifying trusted Web sites, blocking fake ones, and securely managing user names and passwords.
SwapDrive has provided the online storage option for the service on a third-party basis for two years.
SwapDrive charges $50 per year for 2GB of stored data and $100 per year for 5GB. It features wizard-based installation, automatic backups, fast data recovery and ubiquitous service access via the Internet. The company said it takes about 5 minutes to set up; the user designates backup times and other settings only once. After preferences are set, data backups are done automatically.
Users can back up and retrieve information 24 hours a day, seven days a week. Retrieved files are restored to their original formats, settings and locations.
Symantec joins a growing list of large IT companies that now have online services, including EMC (which bought Mozy), IBM (Arsenal), Iron Mountain (Connected and LiveVault), and Seagate (EVault). Microsoft (SkyDrive) and Hewlett-Packard also have their own services.
Even nonstorage companies like PHNS, an IT and business process service provider that specializes in the health care industry, have moved into the space. PHNS bought AmeriVault in April.
There are still a few other online services out there, such as Backup.com, Box.net and Carbonite, but they're getting fewer and farther between. AOL, Amazon.com, AT&T, Comcast and a number of other telecommunications companies and ISPs provide their own versions of this service.
According to Schonfeld's source, SwapDrive made $13 million in profits in 2007, on revenues of $22 million. "That's up from $5 million in revenues the year before, and the company is projecting $40 million in revenues this year," Schonfeld wrote.
"In an era where you can get 5GB of storage for free (from Microsoft's SkyDrive or AOL's XDrive, for instance), both SwapDrive and Backup.com manage to charge $50 a year for 2GB of storage ($100 a year for 5GB)," Schonfeld wrote. "Yeah, I was scratching my head too."
David Friend, CEO and founder of Carbonite-a company that charges $50 per year for unlimited online storage-was one industry expert who was surprised at how low the selling price was for SwapDrive.
"Frankly, I was surprised that the price was so low, given how hot this market is," Friend told eWEEK. "However, that's the danger of being a white-label provider to someone like Symantec.
"It's a little like the lawnmower company that sells 80 percent of its output to Sears. One day they come along and make you 'an offer you can't refuse,' so to speak."
For more on this subject, see Chris Preimesberger's blog, Storage Station.