A talk with CloudBerry Lab at AWS re:Invent 2014

CloudBerry Lab Director of Marketing Alexander Negrash (r) and colleague at re:Invent 2014
CloudBerry Lab Director of Marketing Alexander Negrash (r) and colleague at re:Invent 2014

This week, I’m attending the AWS re:Invent conference (thumbs up) in Las Vegas (thumbs down).

I’ve written before about CloudBerry (also here and here) and was pleased to meet with Director of Marketing Alexander Negrash at the conference for an update on CloudBerry.

CloudBerry has been a good product from an unknown company. Their website didn’t have an office address or, until recently, even a telephone number visible on their website. One could suss out they are based in Russia, but beyond that, it wasn’t clear who they were or how large they are. Turns out that the company isn’t as tiny as one would imagine. According to Negrash, they have offices in St. Petersburg, Estonia, Cyrpus (Cyprus?) and in the US. One of their founders has moved to the US west coast and is building their office here.

The company was founded in 2009 and first gained traction with its free Explorer product which is how I originally found CloudBerry. Their backup products, which I’ve used for years, quickly followed.

Negrash says the company is focused on the small and medium business marketplace and, in particular, is attempting to build a reseller channel based on its cloud-agnostic backup technology. CloudBerry allows managed-service provides to white label the technology and is basing its hopes on the increasing commoditization of cloud storage. They sell licenses to their technology to MSPs and don’t attempt to monetize the relationship between the MSP and the end-user client.

It reminds me of the model we had in the mid 2000s with Ipswitch iMail. This standards-based messaging server was insanely popular among ISPs who used it to provide recurring-charge email service to their customers while all we got was a one-time license fee. When I tried to change that, I nearly caused a riot among the ISP user base who (correctly) assumed we wanted in on their recurring revenue stream. This proves two things — first, I am old enough to have seen nearly every software business model at least once. Second, bad business models never die.

The reason I care about CloudBerry’s success (or failure) is because I’ve made a big bet on it in my current client engagement. I did so because CloudBerry backup is mature, performant and I like its fundamental design. It doesn’t require agents on servers, central servers or other dross that large-scale backup and archiving solutions typically do. You install it on your server, tell it what to backup and on what schedule and it just does it. It’s not perfect — but it’s pretty darn good, especially if you are backing up to AWS S3.

My concerns about CloudBerry’s business model fall into two areas. First, some technology companies use the small and medium business target market as a way to de-feature the product on the wrongheaded assumption that SMBs needs less functionality than enterprises. In the backup case, this could lead to incorrect product decisions in areas like scalability or reliability. SMBs can generate as much data as many enterprises and might be more dependent on backup and restore than larger organizations.

Second, SMB pricing models tend to repel enterprise buyers. Very few enterprise users will use MSPs for backup services. And to appeal to bottom-feeding MSPs, CloudBerry will have to keep prices low. Believe it or not, that’s a turn-off in the enterprise whose buyers consider low-priced products to be somehow inferior.

What’s all this mean? Well, one thing that’s clear is CloudBerry is growing and the immediate future of a good product seems secure. But in the longer term, CloudBerry might discover that it will need to revisit its go-to-market, at least in the US.






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