Veeam acquisition puts heat on rivals

Although at least one analyst warned that the Veeam Software acquisition by Insight Partners should have its competitors wary, two of Veeam's closest backup rivals said they will benefit from the deal.

After disclosing the deal last week, Veeam and private equity firm Insight executives said the backup vendor will shift its strategy toward hybrid cloud data protection and expanding its U.S. presence.

Christophe Bertrand, senior analyst at Enterprise Strategy Group, said Veeam's competitors should be wary of a competitive shakeup. Unlike the scenario where a larger tech player buys up Veeam to bolster its product offerings, Insight has stepped in solely to expand Veeam's reach to generate a return on investment. Bertrand said Veeam now has the financial backing to acquire and accelerate on its expansion strategy.

"Clearly they have a sponsor here who is very focused on growth. It's a private equity firm; they want a good return out of it," Bertrand said.

However, cloud-based backup vendor Druva and data protection and management software vendor Commvault painted the Veeam acquisition in a positive light for them. Executives from those rivals said Veeam's acquisition validates the importance of backup -- and proves their technology and business strategies are on the right track.

Druva CTO Stephen Manley said his company is already established at cloud-based backup, which is part of Veeam's new focus.

"We've got a head start in this market. They have a lot of work to get to where we are," Manley said.

Druva launched its Druva Phoenix platform in 2014, enabling server backup to the cloud, built on AWS. The company acquired Cloud Ranger in 2018 for its AWS backup and disaster recovery features and received a $130 million funding round in June 2019, led by Viking Global Investors.

Manley said the Veeam acquisition will help Druva by drawing attention to cloud-based backup. When large, established vendors make a move into this industry, it generates buzz that customers will inevitably follow. Manley said this leads to customers eventually finding Druva, as well.

Ranga Rajagopalan, vice president of product management at Commvault, said the Veeam acquisition underscores the importance of the backup market. Since June 2018, investors have poured more than $1 billion into cloud data protection vendors Cohesity, Rubrik, Actifio, Druva and Clumio. Insight Partners also poured $500 million into Veeam in January 2019, a year before buying out the entire company.

Rajagopalan said backup is a way to gather all the data. While protecting it remains important, Rajagopalan said that investors and industry experts envision using that data to accelerate application development, analytics and other non-backup purposes.

"It's more than just backup -- it's data management. There's so much more customers can do with their data if they can manage it better," Rajagopalan said.

Commvault's strategy has shifted toward broadening beyond backup, according to Tom Broderick, vice president of strategy and chief of staff at Commvault. He said customers wanting to do more with their backup data has been a growing trend, and the Veeam acquisition shows it's a trend investors are keen on riding and getting a return on.

"We see it as validation for backup and the broader data management scope," Broderick said. "It's very much an encouraging sign."

Rajagopalan said Commvault has an advantage in the enterprise market because its software can be used across all environments. Veeam would have to get a similar breadth of coverage in order to land enterprise deals. Just protecting VMware environments nowadays is no longer sufficient, as enterprise customers use other hypervisors, as well. Rajagopalan also added that merely protecting the data is similarly insufficient.