June 16, 2008

Mike Andrews, Exec VP and Director, NovaStor.com

BR: Please give us some background information about your company, such as how it was founded, how long you have been around, where your headquarters are, and how many branch offices you have etc. Is your customer base mainly in US or do you have substantial international presence as well?

MA: NovaStor was originally founded in 1987 and entered the SaaS – online backup space in 1997 as pioneers with our initial launch of NovaNet-WEB. NovaStor came under new ownership in December 2005 and has since blossomed into a major force offering a complete spectrum of solutions within the data protection industry. Our headquarters are based in Switzerland, with day to day business being run out of California, Germany and Finland. Rather than compete with our partners, NovaStor plays the role of the “enabler” providing them with solutions that easily adapt to suit the unique environments of their end users. NovaStor products are available internationally through our partners ranging from small resellers up to the largest telecommunication and service providers with millions of customers. US business represents about 40% of NovaStor’s revenues.

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?

MA: NovaStor currently has around 60 employees of which over one third are allocated to R&D. We also employ an outsourced engineering partner that scales to our needs for any non-core product development. Our best selling solutions are NovaBACKUP and NovaNet-WEB. Both are award winning solutions targeted at the small business and professional consumer markets. NovaBACKUP has focused more on local data protection and NovaNet-WEB is online/offsite solution targeted more at service providers and corporations with several remote offices. We have just released the latest version (10) of our NovaBACKUP solution, which is the first phase of our development to bring these two technologies together. We are offering an industry first complete solution that offers local and online data protection as well as full image disaster recovery capabilities. They are selling so well because we’re offering our partners a unique value focused solution with strong margins that fills a market need by providing smaller business with enterprise level functionality at a price they can afford.

BR: What makes your company and its services different from others?

MA: NovaStor differentiates from other online backup companies in several areas. For one, we have a fond understanding of the entire data protection market as we create solutions for consumers all the way up to large F500 enterprises that protect information locally to just about any storage device as well as solutions for online data protection. We don’t preach one method to be better than the other as we understand that there are distinct advantages to each and they all play a role in a complete data protection strategy. The end user knows their information the best and we don’t feel that it is our place to dictate where and how it should be stored. We just need to provide them the options and education on Best Practices to make informed decisions. We position ourselves as “enablers”, so we don’t compete with our customers. We work through partners and allow them to create their environments to best suit their business objectives. They can use their own storage, they can use 3rd party storage or if they choose, with our latest technology, they can elect to utilize any of the up and coming platforms like Amazon’s S3 or DigiData’s Eco-System. We provide them with the tools to not only offer a service, but to position their business towards the greatest opportunity to succeed and survive within this competitive landscape.

BR: One of the biggest concerns of online backup users is data security and privacy. How have you addressed these issues?

MA: Security is paramount to our products. Our solutions meet and exceed the highest industry standards as this is the only way to earn the confidence of some of our very high profile partners who can’t be exposed to lapses in security. Confidentiality and integrity of end user data can not be compromised, which is why we support 256 bit AES encryption along with over 10 other encryption varieties, TLS authentication, unique session keys for each transaction and maintain data fully encrypted at the destination encapsulating all user data discretely from others and eliminating the chance for outside access to files.

BR: What kind of growth rate have you been experiencing?

MA: For several years, our growth rate has been substantial and with the pipeline of opportunities now presenting themselves, this should continue to be a thriving market for any players in this space. With the popularity of SaaS, the high profile acquisitions and the hard marketing push by several of the consumer players, businesses are becoming more aware of online data protection. This will only benefit us all for more years to come.

BR: Whom do you consider your main competitors?

MA: Oddly enough, our main competitor is “Status Quo”. Educating and convincing small businesses to protect their critical information has been a difficult task over the years but is beginning to gain wider acceptance. We are truly only experiencing the “tip of the iceberg” at this time. Other competitors (or partners) in getting the word out on this type of service are actually from our perspective not enablers, but more situated as competitors to our partners as they host their own infrastructure – they would include Iron Mountain, EMC (Mozy), Symantec, HP and Carbonite.

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?

MA: We have been in this market for over 10 years experiencing consistent growth and we have seen several large companies come and go along the way. This time, it appears that they’re here to stay, so our philosophy is to embrace them and see where we can take advantage of their strengths (brand recognition, marketing and customer bases) and help our partners capitalize on their weaknesses (focus, customer service and industry knowledge). Telecommunication companies have always been our partner, so nothing will change there, it will be business as usual. Other large companies like Microsoft, HP, Amazon, Google and Yahoo! are building infrastructures that allow 3rd party integration, so rather than competing with us, they’re opening up new opportunities that we can present to our partners to expand their business beyond just storage. Storage is or soon will be the commodity and any smaller company wishing to succeed on selling storage alone will be in for a tough ride. The real success will be realized in professional services and the management of storage, this is where our products will help our partners succeed.

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, Evault by Seagate and SwapDrive by Symantec). What is your strategy? (being acquired, IPO, etc…)

MA: Our strategy right now is to be the best and gain a leadership position in this market. This is going to require our complete focus. If we do this correctly, everything else will take its course.

BR: Are there any new products/services you are developing that will soon be available?

MA: Our next release due out at that end of the summer will introduce the next phase in our strategy of bringing local and online backup together. This will allow service providers to extend their reach into the end user’s home and provide them with a total data protection experience including complete image disaster recovery. We will also be introducing a partner concept to create strength in numbers for smaller providers and capitalize on our millions of NovaBACKUP licenses to create exciting new business opportunities. Our software will recognize any storage as a device, so the options will be limitless.

BR: Where do you see this market heading?

MA: My personal belief is that the future of storage is definitely pointing toward the cloud or grid, but I only see that as part of the equation for online backup services. Applications and hardware will most likely be designed to integrate seamlessly with this storage, so software integration will become a necessity. There will be great opportunity to those providers that can adapt to this space and learn how to manage their customer’s data to gain full benefit of what this technology has to offer. Service providers will also need to bundle services in order to succeed and they will also have to start considering ways to enter the home for new business going beyond the concept of being just a hard drive in the sky. Options will be plentiful for the end users, so to win them over, they will have to play by new rules. Also, look out for new technologies like Cleversafe, aimed at making storage more available, less expensive, but safer than ever.

BR: What is your annual revenue?

MA: As a private company, we do not disclose our revenue numbers.

BR: Which companies are your main sales partners globally?

MA: NovaStor has thousands of reseller and service provider partners globally. We have partnerships with key distributors including Ingram and Synnex and resellers/integrators that include HP, Unisys, Telefonica, Hostway, Henry Schein, PC Mall and several others.

BR: Can you tell us about your servers? Where they are located, how many backups you perform, if server room is controlled for humidity, temperature and what kind of backup generation system you use?

MA: NovaStor and their partners use world class data centers situated globally that offer high levels of security and redundancy to ensure the best level of data protection and integrity for our end users. We work closely with our partners to make certain that they have an environment that protects them on all levels.

BR: Any other news about your company you care to share?

MA: NovaStor is aggressively launching a new partner program and we are searching for new and exciting partners to join our team. We have a unique approach to partnership and strongly believe that lead generation, a push-pull business model and our future product strategies will drive NovaStor and our partners to the next level. There are several major relationships in the works that cannot be disclosed at this time, but I can guarantee that you will be seeing more from us.

Mike Andrews is the Managing Director of NovaStor

Mike Andrews was promoted to the position of Managing Director in January 2007, retaining the title of Executive Vice President of Worldwide Sales, a position which he has held at NovaStor since July of 2000. He is responsible for the operations of NovaStor’s North American head quarters and for the global sales of NovaStor’s complete product line.

Prior to NovaStor, in 1990, he managed a Canadian government inventory tracking and security initiative for 7 years leading to hundreds of millions in cost avoidance and savings, In 1997, he then became the Executive Vice President of Sales at Authentex Software, acting as the North American Distribution for ThunderByte Anti-Virus and a world wide distributor for the award winning DataSafe Encryption Software solution.

He is an 18 year veteran of the data security industry, is co-founder of a system integration and services company and currently sits on the board of Paradox, a non-profit organization that furnishes under privileged students with computers and professional training to assist in the creation of better work opportunities.

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