venturing beyond just duplicating customers’ files, and transforming its service into something resembling a cloud-based hard drive or file sharing system.
Carbonite’s free iPhone app, introduced quietly this month, demonstrates the power of the remote-access feature; it lets Carbonite customers browse their backed-up files from the screens of their phones. “It’s pretty cool,” says Friend. “If you’re sitting at the bus station and you have nothing to do and you want to read that document that somebody sent you yesterday, you can drill down into your files.” Files of types that the phone can handle, such as PDFs or Excel spreadsheets or Word documents, can be opened right on the device.
With more features like this likely to pop up in the future, I asked Friend whether he thinks of Carbonite as a cloud computing company. He was reluctant to take on the label.
“Certainly, what we do is a great example of cloud computing, and online backup is one of the few examples of cloud computing that anybody actually seems willing to pay for,” Friend says. “But that term doesn’t mean much to anyone outside the computer industry. The average person who hears about us on Rachel Maddow or Rush Limbaugh could care less about cloud computing. We are a consumer product, and how we solve the customer’s problem is of no consequence to the customer—all they see is the benefit.”
With the introduction of a beta version of Carbonite Pro last fall, Carbonite also became a business product. Here, the company has departed from its flat-rate model: the service is priced in tiers depending on how much data a company wants to back up, starting at $10 per month for up to 20 gigabytes and ranging up to $250 a month for up to 499 gigabytes. The Pro version put Carbonite back on a par with Mozy, which has long offered both Windows and Mac versions and both home and professional versions of its online backup service.
While Friend is adamant that Carbonite’s easy-to-use software interface makes it a better choice for home users than Mozy, he acknowledges that Carbonite Pro and MozyPro “are very similar in many respects…They’ve been in the market a couple of years, so we are going after them aggressively.” In the business-backup space, however, there’s plenty of room for both companies to grow, Friend believes. “You’d be amazed at the backup processes most small businesses have,” he says. “They’ll go over to Best Buy and buy two external hard drives and do a backup and send one home with the receptionist to keep in her basement. This is what we’re competing with. So we’re both going to do great in this market.”
In fact, while Carbonite’s main rival in the marketplace is Mozy, both companies have a bigger competitor: apathy. Most computer users simply don’t back up their home or work computers, or they wrongly assume that their employers are doing it for them, Friend says. That’s pretty frightening, given statistics showing that 35 percent of PC users experience a complete data loss at least once over the life of their desktop or laptop machine. If consumers grew as vigilant about backing up their data as they are about computer viruses, Friend said, it would make Carbonite into a “huge win” for its investors.
“There is no reason Carbonite couldn’t be as big as a Symantec or a McAfee, with 25 or 50 million paying subscribers,” says Friend. “Anybody who is willing to pay them $50 or $75 a year to protect against viruses would probably be willing to pay that amount to protect their data as well.”
To promulgate its argument about the value of online backup, Carbonite has to be a marketing company as much as a technology company. It may spend a lot on essentials like disk drives, bandwidth, rent, electricity, and customer support—but from all indications, it spends even more on advertising, marketing, customer acquisition, and brand management. (The company is so zealous in this area, in fact, that last year Internet users uncovered cases dating to 2006 in which two junior Carbonite employees had planted positive reviews on Amazon without identifying themselves. The episode attracted scathing criticism from New York Times tech columnist David Pogue and others; Carbonite removed the reviews and Friend apologized for the incident, attributing them to the employees’ inexperience and overenthusiasm.)
“Consumer marketing is in our bones,” says Friend. “If you were to ask what’s the big difference between Carbonite and most of the other people in this business, it’s that we really want to build a brand—to be to online backup what Symantec is to antivirus. When you think of backup, you should think of Carbonite first. And that’s where the bulk of our money goes, to be honest.”
An IPO would presumably bring in enough cash to let Carbonite boost the volume of its marketing campaign by several more notches. So this is one group of nerds that you’re probably going to be hearing a lot from in the next few years.
