Sramana Mitra: Talk to me about the SME market. Help me understand the sweet spots. What are the other characteristics of the sweet spots among your audience?
Austin McChord: We’re selling into the SMB market space. Our sweet spot is the 20 to 200 seat business. They typically have anywhere from half a terabyte to 10 terabytes of critical data. There’s a broad swath of businesses that fit that. It cuts across many verticals – medical, legal, financial, manufacturing, and a lot of creative services companies. In our case, backup is a universal need for businesses.
Sramana Mitra: However, you do require that these 20 to 200 seat companies have a physical presence. A virtual company would not qualify?
Austin McChord: It’s unlikely that we would do work for a virtual company.
Sramana Mitra: Talk to me about the managed service provider network that you work with. You said you are being offered as a suite of services of these managed service providers. Logically, what are the other offerings within that portfolio that you typically slide into?
Austin McChord: The managed service providers typically have a broad set of offerings ranging from a complete outsource of IT functions all the way down to only providing backup. Our managed service providers are also quite diverse. A lot of them are specialized around the industry that they operate in. It might be a part of a contract to manage and maintain a large system of point of sale (POS) machines or it might be a part of all the necessary software to run dentistry offices. They also include backup and everything else associated with that. It’s really a broad set.
Sramana Mitra: Would you say that you are well penetrated in the United States through this channel at this point? Or are there still a lot of other managed service providers who could be selling your services?
Austin McChord: I would say that there’s an enormous amount of opportunity that still abounds in the North American market.
Sramana Mitra: Talk about pricing. What’s happening in cloud services as it pertains to your sweet spot in the 20 to 200 seats company range? What kind of pricing is the market tolerating?
Austin McChord: Pricing, for us, is pretty stable. It hasn’t changed that much in the past couple of years. There’s not an enormous amount of downward pressure for a highly differentiated service like ours.
Sramana Mitra: What is the price point? How do you price your products?
Austin McChord: Since we sell entirely through the channel, we don’t have public price points. Usually, our product set is rolled into a larger service contract. The price set is not something that we would disclose publicly.
Sramana Mitra: Can you comment on an industry level? Let’s say I’m running a 20 to 200 people company, what do I need to budget to buy a suite of services that include your services? What is my outlay?
Austin McChord: Typically, for an all-in backup service, you’re looking at somewhere between $0.50 to $2 per gigabyte per month.