BackupReview.info Interviews Robert Schovenberg, CEO, CM4all Online Backup

This is an exclusive interview conducted by Backup Review (here on referred as “BR”) with Robert Schovenberg (here on referred as “RS”), CEO of CM4all.

Exclusively offered through our OEM partners, the CM4all software will be delivered with customizable graphical user interface – instantly available to be licensed and installed in their or third party data center. While our partners will benefit from remote maintenance and update processes, they can
autonomously decide about volume package and pricing.

Tailored to individual demands, the CM4all software is currently being distributed worldwide via leading telcos, MSOs, ISPs and web hosting companies, like Daily Internet Ltd., Digiweb Ltd., Group NBT, Hostway, Tiscali S.p.A., T-Online (Deutsche Telekom), Terra Networks S.A., Swisscom Fixnet AG, Verio Inc., NTT Communications, and 1&1 Internet AG.

BR: How many employees do you have and how big is your R&D department? What are your best selling products and services and why are they selling so well?
RS: CM-AG is a technology-oriented company. We have over 75 employees – more than half of them are developers who are working on two main product lines: CM4all WebsiteCreator and CM4all OnlineDrive.

CM4all WebsiteCreator is a Do-It-Yourself web builder available in two editions: Consumer and Business. The Consumer Edition is oriented towards the residential market and very simple to use. The Business Edition is designed for small and medium size businesses, allowing a non programmer to build a professional web site in about 20 minutes with 350 templates, a shopping cart, a business blog, driving directions, and other options. Both versions require no technical knowledge.

CM4all OnlineDrive is an online file storage, sharing, and backup solution, oriented towards residential and small business users.

CM4all’s future proof technology is based on a high-speed XML application server and operated on an ASP model. Thanks to almost nine years of international experience in the software industry, our extremely scalable CM4all software is available in 15+ different languages and can be tailored to individual needs.

2.5 million paying users for our products, including more than 1 million users of CM4all OnlineDrive worldwide, show our success.

BR: What makes your company and its services different from others?
RS: CM-AG and its products represent German software engineering at its best. Our first customers were large hosting and telecommunication companies, so our software always had to scale and provide superb reliability. That’s why we have been investing in our technology for the past 8.5 years and can serve 100,000+ active users from one Linux server.

Since we offer our software through OEM partners, we have to provide easy integration with provisioning and hosting infrastructures of our partners. We are able to do this with our multiple APIs and extremely flexible architecture.

We can offer special custom features to our partners, such as T-Online in Germany, which are not normally available from backup vendors. For example, we can provide integration with our partner’s email systems, allowing incoming attachments to be saved into an online storage account. We can also allow pictures, stored in an online storage account, to be sent via MMS to a mobile phone. Furthermore, we can develop mobile clients to access the CM4all OnlineDrive via cell phone.

So, we view online storage as an integral piece of an overall value-added service suite. From an online storage account, a user can send files to mobile phones, personal web sites, photo printing services, and other places.

At the end, we can deliver a private labeled online storage solution, which is reliable, scalable, easy to integrate with and provides the storage and backup features that end users demand.

BR: One of the biggest concerns of online backup users is data security and privacy. How have you addressed these issues?
RS: We guarantee to our partners that user data is secure when it’s stored and transmitted. Privacy is always our concern from the technology side and we ensure that our partner’s privacy policy is enforced within our products. Furthermore the data is always stored in the safe environment of our OEM partner’s data center and can be encrypted (SSL connection with 128-bit). Prior to the first release our software had to pass security checks by external specialists (e.g. extensively tested for SQL injection, cross-site-scripting etc.).

BR: What kind of growth rate have you been experiencing? And what is your expected growth rate for the next few years?
RS: We are in the online storage business for the long haul, so we are building up a solid base of OEM partners, who are committed to offering storage and backup solutions to their customers. We have over 1 Million end users of CM4all OnlineDrive after 2 years in operation. So, it’s great to see one of the largest telcos in Europe adding several thousand new CM4all OnlineDrive customers each week and at the same time seeing our hosting customers successfully serving very specialized communities from the same technology core. Being conservative, we are expecting a stable growth rate for the next few years in the range of 20-30% a year from each of our partners.

BR: How has online backup business evolved in the last few years, and how do you see it further evolving?
RS: We see the online backup business moving towards a maturity phase with fewer players and more consolidation. We are also expecting a major drop in storage and bandwidth prices with big storage companies entering the market, willing to make major investment in infrastructure, backend systems and client interfaces. Reliability and safety of online backup vendors will play more and more important role in the eyes of consumers.

BR: Whom do you consider your main competitors? Do you have any?
RS: As a technology provider, we have a pretty unique positioning in the market and don’t see a lot of direct competitors that provide, install and maintain customized OEM solutions. As our software is being distributed via ISPs, telcos and web hosting companies worldwide the existing offerings that are available to end users in the online storage market do compete with our current and potential partners for their end users.

CM4all OnlineDrive is the perfect answer for reducing churn rate and creating valuable contacts for cross and up-selling. Through our technology, partners can live up to high expectations on professional file storage and a file sharing solution, which are especially demanded by digital media consumers. For the overall success of our partners it is of strategic importance to lock in their existing customers by offering online storage and encourage them to use this value added service. This is notonly crucial because of customer retention but also to being able to monetize on the customer relations by generating returns from complementary services like photo finishing, multimedia messaging or paid contents.

So what we essentially do by licensing our technology is enabling our partners to being able to compete with existing and future offerings also from major companies like Microsoft and Google that start pushing into the online storage market.

BR: Large companies such as Microsoft and major telco’s have started offering online backup business. Do you fear them? How do you plan to compete against such formidable adversaries?
RS: As previously outlined telcos are our customers and we enable them with providing our technology to compete with the established and new players in the market. So we do not fear them but do of course strongly encourage our partners that are competing with them to offer more value-added services, such as online backup, in order to create stickiness, reduce churn, and generate additional revenue.

As a trusted partner they are in a prime position to develop a long-term relationship with their customers and be a safe keeper of people’s pictures and other files. Giants like Microsoft, on the other hand, have many challenges ahead in trying to convince people around the world that they are a safe, secure, and reliable place to store your most precious memories. Not to talk about catering for the needs of the individual and local markets in an area that is not one of their core competences (yet).

BR: There has been quite a bit of M&A activity in the industry lately (such as xdrive being acquired by AOL, Microsoft acquiring Foldershare and LiveVault by Iron Mountain, and Evault by Seagate). What is your strategy? (being acquired, IPO, etc…)
RS: We are a solid profitable company with a sustainable cash flow and a unique competitive advantage. We are growing and heavily investing in our technology, insuring a strong product offering for many years to come. Our strategy is to continuously innovate, so that our solutions are scalable, high performing, and easy to use and support.

BR: What is your opinion about Google entering the online backup business?
RS: We are looking forward towards Google entering the online backup business. It will certainly bring more attention to online storage and backup, which in turn will make telcos and ISPs pay more attention to the backup business. When the overall market for online storage expands, it becomes more crucial for big players with no backup solution to find one that can fulfill their needs.

BR: Do you feel that Google will dominate the market?
RS: It is yet to be seen that Google can dominate any market outside of search. Google has strong brand recognition and vast storage infrastructure, but there is a major uncertainty of the appeal of its online backup to consumers, considering the privacy issues Google has been struggling with. There is also uncertainty over the role that online backup will play in Google’s future strategy and the direction the company will take with its non-search related products.

BR: How does your proprietary technology compare to the proprietary technology of main competitors?
RS: When we design our solutions, we always consider two factors first: scalability and ease of deployment. We design the back-end architecture first to insure that the product can support high user volume and at the same time perform efficiently on inexpensive standard hardware. CM4all OnlineDrive is written entirely in C and can run in a cluster supporting virtually unlimited number of users and files. Our unique software development methodology allows us to customize each installation for the partner’s specific needs, integrate with a variety of systems, and deliver new features in a fraction of time it usually takes.

BR: What is the most regrettable mistake that you or your company made in the past? How would you handle that mistake if you got a second chance? In the future, say five years from now, do you think the cost of online backup will remain as today or will it go significantly cheaper (For example to backup a 1 GB file)?
RS: CM-AG is very pleased with its position in the market place and sees a crucial role for online storage and backup as broadband technology and availability further improves. We have seen the cost of online backup and bandwidth decrease, as bigger players, such as Amazon, enter the market, and more players, such as EMC, not far behind. We have no reason to doubt that this trend for lower prices for storage and bandwidth will continue and benefit the consumer – in turn creating additional demand for online storage and backup services.

BR: How many subscribers do you have? What is the amount of file you backed up in your servers?
RS: We have over 1 Million active users using CM4all OnlineDrive with many terabytes of data stored on our partners’ servers.

BR: What do you see as the greatest challenges facing your company today? And what are your biggest accomplishments so far?
RS: Being an independent software company is not easy in the age of multi-billion dollar corporations and a seemingly endless supply of venture capital. CM-AG always has to stay focused on our market niche and not to invest in projects that are too risky. As a software developer it is also important for us to create a productive and friendly working atmosphere, which allows innovation and flexibility. So far, we have been able to deal successfully with these challenges, surviving bubbles and downturns and growing our business each year. Some of the world’s best software engineers from Germany and Switzerland work on our products.

We count the world’s largest telcos, such as T-Online in Germany, Terra Networks in South America, and NTT in Japan, as our partners. Considering our size, we can offer a full hosting platform and a suite of value added service applications, including online backup, and deploy it in several months. We are thriving in an industry, where most of our competition has either failed or is consistently losing money.

BR: What are the key competing technologies and what are some of the advantages you offer over the competition?
RS: There are numerous players in the online storage and backup field – some with solid back-end technologies and easy to use clients. We have always positioned our CM4all OnlineDrive solution to possess the following key attributes: scalable, reliable, highly performing, private labeled, easy to use, easy to integrate with and deploy, and requiring inexpensive hardware to run.

BR: Can you tell us about your servers? Where they are located, how many backups you perform, if server room is controlled for humidity?
RS: Our servers are located in the data centers of our partners all over the world. For example, T-Online in Germany as our largest partner, has two underground mirrored data centers, which are designed to withstand a nuclear attack. We provide 24/7 monitoring of the servers via the Internet, software upgrades and bug fixes, and second level support. Our partners maintain the hardware and take care of customer relationships.

BR: Any other news about your company you care to share?
RS: Our latest customer addition for the OnlineDrive includes LocaWeb, one of the largest hosting providers in Latin America that has recently launched CM4all OnlineDrive to its customers in Brazilian Portuguese. LocaWeb is marketing CM4all OnlineDrive as “Disco Virtual”, allowing users to upload files via our ActiveX control, share them with friends and family, run automated backups, and access their files via a web browser or any WebDAV client.