Can small Online Backup Companies compete with Larger $5/month Services?

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) February 27, 2009 -- You see them everywhere – advertisements for companies like Mozy and Carbonite who offer to back up your personal computer for $5 a month, often offering “unlimited” storage space. So, how does a small Online Backup company compete? The answer is: Don’t.

As a small Online Backup Service Provider with, say, fewer than 1,000 accounts, you most likely cannot afford to sell services to home users for $5 a month; nor should you want to.

1

Can small Online Backup Companies compete with Larger $5/month Services?

Welcome visit Our WebSite:

http://Remote-Backup.com

If you have 5,000 or more accounts, then of course the economy of scale works in your favor. With the right plan and the right marketing, you might be able to profitably approach $5/month and address the home market. But let’s just say for the sake of this discussion, you have fewer than 250 accounts.

Two hundred and fifty accounts at $5/month would gross out at $1250 a month, or $15,000 a year. I don’t know about you, but for the trouble of giving 250 customers an adequate level of service while maintaining your equipment and trying to turn a profit, I am not at all interested in this business. I’m not even interested at $10/month, or $15/month.

However, at $19.99 a month I’m bringing in $60,000 a year and beginning to show a little interest. At $29.99 a month I’m making $90K; and at a very reasonable $89.99 a month for the kind of business-class service I can offer with RBackup, I am VERY entertained by my $270,000 a year from my loyal group of 250 small business customers.

Now, please understand that I am not trashing the $5/month services. In high enough numbers, $5/month can make money.

In a “Fireside Chat” sponsored by Future Forward (FutureForward.com) on Nov 23 2008 David Friend, CEO of Carbonite (one of the $5/month services) said that he has more than 15 billion files in storage. He spends about $50 to acquire each new customer, and charges $49.95 per year for his service. He says he keeps each customer for 4.5 years, so, David is paying $50 for $225. I’ll do that all day long.

David claims his average customer retention period is 4.5 years, although I wonder about that. Carbonite was founded in 2005 (PRNewswire Nov 20 2008), so he’s only been in business about 3 years.

David says he spends a million dollars a month on advertising. So, at $50 per customer, and discounting referrals, Carbonite must be signing up more than 22,000 customers a month, none of whom have dropped the service.

Personally, I’m skeptical. But, we know from Relativity Theory that with numbers as large as David’s, normal mathematics breaks down. So, maybe it’s possible to wormhole four and a half years into three.

Now, David is a smart guy – a serial entrepreneur with many successes under his belt. He has been able to attract many millions of dollars in venture capital for Carbonite. So, not only does Dave believe in $5/month services, so do a lot of other smart people with a lot of money.

So sure, there’s gold in them thar little customers – but only in large numbers. My advice is to leave them to Mozy and Carbonite, and move

More information can be found online at http://Remote-Backup.com

Carbonite     Data Security     data storage     Mozy     online backup     remote backup     remote backup systems