I wanted to bring to your attention another very nice review of Carbonite. This one, by Mike, at Simply Offsite is thoughtful and balanced, IMHO. In the comments on his blog, I did try to explain why it's very hard for Carbonite to have an "estimated time to completion" indication for the initial backup like some other backup services do. The reason, in short, is that Carbonite allocates bandwidth dynamically so that it never interferes with your browsing. If you're using the Internet for other things, Carbonite will automatically slow down to get out of the way. So we can't tell you how long your backup is going to take because it depends on whether you'll be using your computer in the meantime. Other backup services transfer data at a steady pace. So while that makes the backup time predictable, it also means that your computer is going to feel really sluggish while the backup is going on – not a good thing.

— Dave
CEO, Carbonite

When Carbonite entered the online backup market in May 2006, everyone in the online backup business was pricing their services by the gigabyte. We introduced the first backup service with unlimited storage for a fixed price. Why? Because our market research showed that people didn't like having to learn new software applications and they didn't like having to figure out what they needed to back up. If your backup is limited to, say, 5GB, you are forced to pick and choose files and folders. We envisioned a service that didn't require the user to do anything other than put in an email address and password.

Many people think that we came out with unlimited backup in order to win the "gigabyte war" vendor A gives you 5GB for $5/mo, vendor B gives you 10GB for $5/mo, and so on. But that's really not why we decided on unlimited backup – the REAL reason was simplicity of the user experience. If you make the capacity unlimited, then the user doesn't have to make any choice – we just back up everything by default.

What happened, of course, is that our direct competitors were forced to switch to an unlimited pricing plan, but THEY DIDN'T CHANGE THEIR PRODUCTS! They missed the point. You still had to learn new software. Every bit of complexity makes it harder for the user and lowers adoption rate.

We are committed to one simple task: protect all the valuable data on your computer with the absolute minimum of effort and at the lowest possible cost to you.

— Dave
CEO, Carbonite

Although it didn't come as a surprise, the news about the SwapDrive acquisition has caused quite a stir in the industry.  Yesterday, we were in touch with eWeek and Backupreview.info, two sites that wanted to share Dave’s view on the acquisition.  eWeek published an article as well as a blog post that included much of what Dave posted on our blog yesterday. BackupReview.info also posted a Q & A to share Dave's thoughts with the online backup industry.

In addition, we issued the following press release:

June 11, 2008

Online Backup Continues to Emerge Mainstream as Old Industry Giant
Snaps up Another Established Backup Brand

BOSTON — (BUSINESS WIRE) — David Friend, CEO and co-founder of online data backup company Carbonite, says online backup is continuing to emerge mainstream, as illustrated by another old industry giant gobbling up an established online backup player.

Symantec acknowledged the truth of reports yesterday that it acquired SwapDrive and its companies, Backup.com and WhaleMail.com, leaving Carbonite as one of the last-standing large independent online backup services.

“Frankly, I was surprised that the price was so low, given how hot this market is,” Friend said. “However, that's the danger of being a white label provider to someone like Symantec. It's like the lawnmower company that sells 80 percent of its output to a major retailer. One day they come along and make you ‘an offer you can’t refuse,’ so to speak.”

In the past year, Mozy has been acquired by EMC and Arsenal Digital was acquired by IBM. In previous years Connected and LiveVault were acquired by Iron Mountain, and EVault was acquired by Seagate Technologies

“The online backup space is hot and everyone is suddenly interested in getting into the game,” Friend said. “Symantec realized you can protect your PC with antivirus, anti-spyware, and so forth, but the most important thing to protect is your data. Only online backup provides that protection. No anti-anything can keep your hard drive from crashing or keep a burglar from stealing your computer.”

Carbonite recently passed its 200 millionth file restored and has backed up more than three billion files for consumers and small businesses.

“One by one our competitors have been snapped up by big old companies and we are standing alone as the top independent backup provider,” Friend said. “We’re poised to become the trusted brand in online backup, much like Norton emerged for anti-virus. With a simple and trustworthy product, we are in a position to continue our rapid growth.”

About Carbonite

Carbonite launched its Online PCBackup™ service in May 2006. Carbonite’s industry-first offer of unlimited backup space for a flat low price revolutionized the market for consumer and small business backup services. So far the company has backed up more than 2.5 billion files, has restored more than 160 million lost files for its customers and has a large data center where capacity is measured in petabytes. There are Carbonite users in nearly 100 countries.

Founded in 2005, Carbonite believes that computer users should not have to think about backup. The company’s mission is to provide an affordable, reliable, secure and easy-to-use solution for the mainstream computer user. Carbonite is available to consumers and small business through numerous channels, including its corporate Web site, major US retailers and international distributors. For more information, please visit www.carbonite.com.

— Alison

Symantec announced today that they have acquired Swapdrive for $123 million. Swapdrive is the white-label online backup company that has been providing the free 2GB offer that is included with every copy of Norton 360. Frankly, I was surprised that the price wasn't higher given how hot this market is. However, that's the danger of being a white-label provider to someone like Symantec. It's like the little lawnmower company that sells 80% of it's output to Sears. One day they come along and make you "an offer you can't refuse," so to speak.

From what we hear, the take rate on the Norton 360 backup option has been pretty good. The bundle definitely makes sense: you can protect your PC with antivirus, anti-spyware, and so forth, but the most important thing is to protect your data. And only online backup provides that protection. No anti-anything can keep your hard drive from crashing or keep a burglar from stealing your computer.

One by one our competitors have been snapped up by big old companies. LiveVault, EVault, Connected, and most of the old-line enterprise online backup companies have been bought. Mozy was recently bought by EMC for $76M. And now SwapDrive for a reported $123M.

Our ambitions go far beyond the white-label strategy of Swapdrive. In the consumer space, Carbonite now has 11% brand recognition. Swapdrive is probably 0. Norton was one of the early providers of anti-virus software and built a brand that, for a while, was almost synonymous with anti-virus in the consumer and business markets. We’re trying to do the same thing with backup – that’s why you hear our endorsement ads on radio shows with hosts like Howard Stern, Rush Limbaugh, and others. In fact, I often tell our employees that we’re going to be to online backup what Norton is to anti-virus. While we have lots of co-marketing and reselling deals, it should be clear to everyone that one of our goals is to be the trusted brand name in online backup.

The online backup space is hot. Everyone is suddenly interested in getting into the game. We just cut a deal with a leading PC manufacturer (announcement shortly) that is starting to ship their PCs with a free subscription to Carbonite pre-loaded. In a few years, online backup will be part of the pre-install on every PC. Why? Because when your hard drive crashes and you lose all your family pictures, you don’t blame Seagate or Western Digital – you blame your PC manufacturer. It’s a big brand liability issue for the PC manufacturers. Carbonite can make that problem go away for a PC manufacturer. Similarly, bundling online backup with anti-virus makes sense and we’re pursuing partnership deals.

When you look out 5 years, I think almost everyone will be backing up their PC using services like Carbonite. Broadband is getting cheaper and faster, and disk storage costs are dropping like a rock. The alternatives don’t look very attractive: a) don’t backup and risk losing everything, b) buy an external hard drive. External hard drives are not ideal for backups because they usually sit right next to your computer, so if someone breaks in and steals your computer, or if it is damaged by fire, flood, or virus attack, both the computer and the hard drive will go bye-bye. Plus they are prone to failure (roughly 3% per year die) – a RAID6 array that stores your data at Carbonite is 36 million times more reliable than an external hard drive.

We think Carbonite is a much better product than Swapdrive (we are of coursed biased in that regard) — it’s much simpler to use, and much less expensive.

We just want to keep building the best online backup company in the world and hopefully take it public in a couple of years.

— Dave
CEO, Carbonite

Several people have asked me to post a description of our infrastructure. As I mentioned in my previous post about HP’s infrastructure difficulties, "HP Upline and the challenge of large scale backup," keeping billions of files safe is no small task.

The first thing you should know about our architecture is that we never handle unencrypted data. Carbonite encrypts all files before they leave your PC. We use 448-bit Blowfish encryption. I’ve been told that Blowfish has never been cracked. It is the strongest commercial encryption on the market.

Carbonite employs the most sophisticated firewalls and intrusion detection systems available. We pay a professional hacker firm to attack the data center constantly, looking for security holes. I think our defenses are as good as most banks. Heise Security recently wrote about how they hacked into many of our competitors’ backup systems but were unable to hack into Carbonite Their so-called “Man-In-The-Middle” test attack is something we designed against from the beginning. Frankly, I was amazed that most of the other vendors were so easily hacked by these guys and backed up files either compromised or deleted.

At our secure data center, your data is stored on arrays of 1-terabyte enterprise-grade drives. Carbonite uses RAID-6 redundant arrays which spread copies of the data across multiple hard drives. Each array has 16 drives. Three of the 16 would have to fail simultaneously and the user’s PC would have to crash at the same time before any data would be lost. These RAID-6 arrays are 36,000,000 times more reliable than the hard drive in your computer. We have redundant power, redundant Internet connections, redundant Web servers and so forth. The data center is guarded 24 hours a day, seven days a week; and admission is controlled by fingerprint ID locks.

As you can imagine, we use a lot of bandwidth. We currently back up over 40 million new files every day and we have over 7 billion already backed up. Given the amount of bandwidth we use, it’s best to be located in a major telecoms center where multiple carriers converge. Therefore, we chose to build our data center in one of those so-called “bomb-proof” buildings with all the major Boston financial institutions and telcos.

— Dave
CEO, Carbonite

I'm sure that many of you have read that HP’s online backup service went down shortly after it was introduced. It’s back up now, and HP has explained that what they experienced was a "technical glitch." Here are a few links about this story:

Enterprise Storage Forum: HP Upline Suffers Downtime

InformationWeek: HP Shuts Down Online Storage Service

Beta News: Bringing down the cloud: HP's Upline down for a third of its life

Why am I blogging about HP’s problems? Only because it underscores the difficulty of building a reliable large scale backup service.

When I was out raising money for Carbonite, one venture capitalist dismissed backup as a "trivial" application. It reminded me of an incident when I was teaching at MIT a few years ago: one of my students insisted that Google wasn't worth billions of dollars because "anyone can write a search engine." It’s true. But Google's barrier to entry is their huge scale. To build a backup service that can flawlessly store and retrieve billions of files is not so easy, as HP has learned.

When we first started out, we were using Microsoft’s NTFS file system. When we got to about 500 million files, it started to crash and gave us all kinds of problems. When we called Microsoft for help, the engineer on the other end asked us how many files we were storing. When we said "about 500 million", there was silence on the other end of the phone. He said "Uh, well we didn’t really design NTFS for that many files." So we set about building our own proprietary file system that could handle more than a trillion files, because that’s where we’ll be in a couple of years. We currently receive almost 40 million new files every day. And we have close to 7 billion files backed up. We restore millions of files every day.

To do all that without losing any data is an enormously complicated engineering challenge. We're three and a half years into this effort and there is no shortcut way to get to where we are, no matter how much money you throw at the problem. Our confidence in our own infrastructure is due to the fact that we’ve built a customer base of hundreds of thousands of users. Until a company does that, they’ll never know whether their systems are going to fall over. HP, with all their resources, is going through the same learning curve that we’ve gone through for the last 3 years.

— Dave
CEO, Carbonite