04 Dec 2008

By Paul Korzeniowski
December 3, 2008

Big vendors have elbowed their way into the market via acquisitions

The online backup market is evolving fast. The market is relatively small — estimates are that it generates a couple of hundred million dollars in revenue in the U.S. annually. However small the numbers are now, the potential size of the market has attracted some very large players, such as EMC Corp. (NYSE: EMC), IBM Corp. (NYSE: IBM), Iron Mountain Inc. (NYSE: IRM), Seagate Technology Inc. (NYSE: STX), and others. Many have wedged their way into this sector via acquisitions. Consequently, there has been a lot of turbulence during the past few years, and more changes may loom on the horizon.

One reason for the small market penetration is that the first generation of online backup was not all that successful. These services first emerged during the dotcom boom at the turn of the millennium, but they weren’t embraced by customers. “Several years ago, the market was stymied by a lack of broadband connections,” says Dave Robinson, vice president of marketing at EMC’s online backup service Mozy.

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