The problems faced by large enterprises in controlling data growth over the next few years will fuel rapidly increasing corporate use of hosted backup services, according to a new IDC report.
The analyst and research firm predicts that online backup revenues will climb to US$715 million in 2011, up from $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.
This will be particularly important when compared to traditional off-site disaster recovery operations 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 … 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 assurance to IT managers that hosted storage systems are legitimate solutions to their storage problems.
Recent acquisitions include EMC Corp.'s $76 million purchase of start-up Berkeley Data Systems and its Mozy online backup business, IBM's acquisition of Arsenal Digital Solutions USA, and Seagate's ttakeover 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, which sells the Simple Storage Service hosted product.
In addition, he noted that Microsoft Corp. has announced a hosted offering, while Google Inc. is reportedly readying its entrance to the market.