The inability of large enterprises to control exploding data growth over the next few years will fuel rapidly increasing corporate use of hosted backup services, according to an IDC report released last week.
In the report the IT research firm predicts that online backup revenues will climb to US$715 million in 2011, up from US$235 million in 2007.
Doug Chandler, an IDC analyst, said that providers of online backup services will have to convince corporate users that hosted systems can maintain the data security and strong time-to-restore performance of physical storage servers, especially compared to traditional off-site disaster recovery and regulatory-compliance retention-backup systems.
"There is so much data being generated by individuals that [companies] need to do something about backup," said Chandler. "There are new pressures to have a strategy in place to be able to know that yes, those files have been stored and will be retrievable for several years."
He said the entrance of major vendors into the online backup arena over the past 12 months is lending much-needed assurances to IT managers that hosted storage systems are legitimate solutions to their storage problems. Recent acquisitions include EMC's US$76 million purchase of start-up Berkeley Data Systems Inc. and its Mozy online backup business, IBM's acquisition of Arsenal Digital Solutions USA, and Seagate's takeover of EVault.
"Powerful brands like EMC, Seagate and IBM [provide] a different equation for enterprise customers. I think that is going to make a big difference," remarked Chandler. In fact, he said that numerous IDC clients have said that they would try online backup only if it were delivered by their largest storage provider.
In the short term, IDC expects that mostly consumers and small to midsize businesses will use online backup systems. The researcher predicts that vendors will cut prices in the short term to boost corporate demand.
For its online backup revenue forecast, IDC did not take into account hosted backup services offered as part of a broader application. However, Chandler acknowledged that some businesses are keeping a close eye on online storage offerings from companies such as Amazon.com Inc., which sells the Simple Storage Service hosted product.
In addition, he noted that Microsoft has announced a hosted offering, while Google is reportedly readying its entrance into the market.
"A lot of [online backup] activity and investment will be more in the direction of Web 2.0 type of content because I think that is where many people believe that is where data will be generated in next five to 10 years," said Chandler.
"There is definitely buzz around the discussion of 'What is Google going to do and what is Microsoft going to do,' " surrounding online storage, he added.