Analysis Data protection and security player Barracuda is being affected by customers moving away from point products, and the resulting combined data protection plus security themes could mean other pure-play backup suppliers are going to be left behind.
At EMEA TechSummit in Alpbach, Austria, CEO and president BJ Jenkins outlined a product strategy focussed on three areas: data protection; network security; and email security and management.
A year ago Barracuda had started product and channel retuning to reflect its customers' surprisingly fast conversion to using the public cloud, adopting Office 365 for example.
That meant its on-premises product sales growth slowed, although security products like its firewalls still had high demand, and subscription contracts started playing a larger role in its revenue than hardware and licence sales.
Jenkins said the company's traditional small and medium business (SMB) and newer mid-market customers were still moving quickly to the public cloud and managed service provider (MSP) delivery of backup and security management services. Previously the company had had too many individually sold point products when customers now wanted overall problem fixes, such as email management and ransomware/malware defence.
Barracuda's point products needed to work better together.
Rejig and retune
Jenkins said it had decided to tune its products and go-to-market methods to go where its customers wanted it to go.
Less viable products such as CudaDrive and CudaTel (Barracuda Phone System) were dropped, and engineering resources refocussed on the growth areas, such as backup and public cloud service delivery.
Grouped product offerings, which amalgamated features from previous point products, such as Essentials for Office 365 (content security, advanced threat protection, and archiving features), were introduced. The virtual firewall, Vx, illustrates Barracuda's move to running and offering services in the public cloud.
The new approach worked. In the year to March 2017 there were 3,481 customers for Essentials, 53 per cent new to Barracuda and 38 per cent migrating from Barracuda's Email Security Gateway (ESG). There were 2,337 new customers for its Network Security offering, with 16,000 firewalls sold, and services available via Amazon, Azure and Google Cloud Services.
Jenkins said the average sales cycle was down to 32 days, from a customer first having sales contact with Barracuda about the product to buying it.
The story for this year is one of further developing the products for a cloudy IT world. Senior vice president and general manager Hatem Naguib said that security products, such as the Next Generation Firewall and Web Application Firewall (WAF), had been reimplemented as microservices.
You can be protected both in the perimeter (NG Firewall) and the app side (WAF) because these products now talk to each other. Barracuda will be extending that. It also wants to extend its Next Generation Firewall to scale more and better fit the cloud.
The company is developing intelligent layered defence for advance threat protection with:
- CPU-Emulation sandbox
- Static Analysis
- Behavioural analysis
- Signature analysis against database records
It has no developments focussed on blockchain, an Acronis focus. But it does have a focus on multi-cloud backup, which it thinks is definitely coming.
Barracuda and its competition
The company is operating in a hotly contested market, with many other suppliers and having to fight for every customer, convincing them that its products and services are better.
Against Acronis, for example, it positions itself as a backup-focussed company. With ransomware attacks the hackers can threaten to and actually publish a company's private data so just having backup data copies is not enough of a defence any more. You need layered security, email and network security in conjunction with backup, and Barracuda has that.
As Barracuda has moved up into the mid-market it's met Commvault moving down from the enterprise heights. Many mid-market customers already have on-premises security suppliers. Barracuda says it can deploy in the cloud, a relatively green-field area, and so get an "in" to mid-market companies, later expanding to cover their on-premises needs.
It doesn't see CTERA in its markets but it absolutely does see Veeam, the big backup beast. In response, Barracuda released its virtual backup appliance last year and shifted its prices to help its resellers compete more effectively.
And Veeam has, Barracuda says, no equivalent security offering of its own. The more backup is seen as part of an overall security play, the better it is for Barracuda, as with Acronis.
Barracuda's business size
Barracuda is a $350m revenue run rate company, about half the size of Veeam and Commvault, nearly twice the size of $190m run-rate Mimecast, and 3.5 times larger than Rubrik, with its $100m run rate.
Will organic growth take it up the ladder to the Commvault/Veeam heights? Or could it grow further and faster by acquisition?
It bought Intronis for $65m in October 2015 to help it enter the managed service provider market.
It bought email archiver and manager C2C for an undisclosed sum in September 2014. And it bought Austria-based phion AG and its firewall technology in 2009. Wieland Alge, CEO of phion, is now Barracuda's general manager for its EMEA region, and firewall sales are a vital part of Barracuda's business.
Barracuda has historically grown by acquiring technology-based businesses that fill out its product portfolio. Rod Matthews, SVP for Data Protection, wouldn't rule out further acquisitions, but didn't identify any planned ones.
Barracuda has a three-pronged backup/email security/network security strategy, with both on-premises and public cloud attributes, and says customers today need comprehensive and combined data protection and security facilities covering their on-premises and public cloud IT facilities. With its product set it would say that, though.
Are the words empty? The business results say not: 3,481 customers for Essentials, 53 per cent new to Barracuda. 2,337 new customers for its Network Security offering, 16,000 firewalls sold, and services available via Amazon, Azure and Google Cloud Services.
The shortening average sales cycle of 32 days also suggests Barracuda is in touch with the market. All these things imply that pure-play backup providers, especially the ones with an on-premises focus, could be in trouble. If their customers start thinking that on-premises backup is just part of an overall protection and security need then Barracuda could be sitting pretty, ready to cream off their customers. We'll see if that's the case in the next few quarters. ®