Some recent announcements from major storage vendors highlight the increasingly heated competition in the market for backup software targeted at small-to-midsized businesses (SMBs). First, in January, VERITAS launched two new backup packages, Backup Exec 10.0 for Windows Servers and VERITAS Backup Exec Suite. The packages, which contain more than 100 new features, are the most significant releases in the company's history, say VERITAS officials. The new versions feature centralized backup storage management and continuous data protection. VERITAS followed up on these releases by announcing that Backup Exec QuickStart Edition 10.0 will be bundled with Sony's branded tape drives, including all Sony Advanced Intelligent Tape (AIT) drive models and the lower-end DDS-4 models, making Sony the first OEM partner for Backup Exec 10.0. Clearly VERITAS, which is in the process of merging with Symantec, is moving aggressively to shore up its leadership positions in the backup and recovery space, particularly in the SMB area. According to market researcher IDC, VERITAS held a 40.4 percent share of the overall backup and archiving market in the third quarter of 2004. Another research firm, The NPD Group, placed VERITAS's share of the SMB backup and recovery market at 53 percent.

Sandwiched between the VERITAS announcements, EMC unveiled the first new features for EMC Dantz Retrospect, the backup and recovery package EMC purchased from Dantz Development for $50 million in October 2004, which extends EMC's product portfolio into the SMB arena. Although EMC Dantz Retrospect's roots are in the Macintosh marketplace, the product provides backup and one-step recovery for file servers, desktop computers, and notebooks that run Windows, Red Hat Linux, or Solaris. EMC's late-January release of EMC Dantz Retrospect 7 for Windows includes new wizards to automate data protection. Although not a major upgrade, the announcement signals EMC's determination to compete in an area that it had long conceded to others.

What's Driving the SMB Storage Space?
Three major factors are driving the increasingly heated competition among storage and backup and recovery vendors in the SMB space. First, the market itself is huge and is continually growing as an area of opportunity for vendors. Second, backup and recovery continues to be problematic for SMBs. And third, the problem promises to get worse before it gets better.

Although many large IT vendors have long concentrated on serving the needs of Fortune 3000 companies and large government agencies, IT spending by SMBs in the United States alone is currently more than $300 billion annually by some estimates and could grow to close to $700 billion by 2008. According to IDC, the SMB sector currently accounts for 54 percent of all IT spending, and companies in this arena are increasingly willing to invest in IT. In fact, IBM, which now generates about 20 percent of its worldwide revenue from SMBs, reports that the SMB area is the fastest-growing segment of its business.

Despite the healthy growth outlook, the SMB sector continues to be difficult for storage and backup and recovery vendors to address. First, the name "SMB" is something of a misnomer. The SMB market is typically divided into three distinct parts, differentiated by the number of employees. The most commonly drawn lines are companies with 1000 to 3000 employees, companies with 100 to 1000 employees, and companies with fewer than 100 employees. Of course, the technology needs and resources of a company that has fewer than 100 employees are radically different than those of a company that has close to 3000 employees.

What these differently sized companies do have in common, however, is that the amount of data they must manage is growing by 50 percent or more a year, and a large percentage of that data--perhaps as much as 60 percent--is stored on desktop and laptop computers. But according to IDC, only about 40 percent of all SMBs back up their data regularly. Often backup operations are too complicated and time-consuming to consistently implement for companies that don't have large, dedicated IT staffs.

Further complicating backup and recovery in the SMB sector is the emergence of personal storage technologies, such as thumb drives and memory sticks. The growing popularity of such technologies means that more and more corporate data will be stored on devices that aren't usually connected to corporate networks. The first step that SMBs must take to address this challenge is probably not a technical one but a conceptual one. Companies must establish policies to ensure that key data is safeguarded. Those policies can then drive the technological solutions.

The SMB market segment is a potential gold mine for vendors that offer backup and recovery products that are easy to install and administer. To address the SMB challenges, storage vendors are taking different approaches, such as OEM partnerships (VERITAS's strategy), technology or company acquisitions (EMC's strategy), or by developing products specifically geared to meeting the data-storage and retrieval needs of smaller organizations.