EMC buys Mozy; Roger Rabbit missing

Online backup provider Mozy delivers backup and storage services at per-GB prices that are way below the annual acquisition and maintenance costs EMC's enterprise customers pay. So exactly why is EMC buying Mozy?
Written by Phil Wainewright, Contributor

A passing comment made several years ago has always stuck in my mind. I forget who said it, but he was talking about the unrealistic economics of early online backup providers. They had used their dot-com era venture funding to buy into high-end EMC storage infrastructure and were subsequently saddled with "impossibly high" running costs.

I was reminded of this comment when I heard today's news, broken by TechCrunch, that EMC has bought online backup provider Mozy for $76 million (Techmeme coverage here). And it made me wonder what exactly is going on.

At face value, it looks like a good way for EMC to buy a valuable presence in the online backup market. Mozy has an enthusiastic user base and is ramping up fast thanks to a lot of positive word-of-mouth. Where it scores is in providing a continuous incremental backup, which means it just keeps backing up your data in background whenever you're on line. Users also love the pricing: a flat rate $4.95 a month for unlimited storage — a price that does make you wonder, in these days of online photos, video and other storage-hogging items, how it can possibly make money. Its business and professional offering, Mozy Pro, charges a more realistic but still very affordable 50c per GB per month (on top of a flat $3.95 per machine monthly licence).

Mozy wins fewer plaudits for its restore process, but of course few users get to test that out. A complete restore of many gigabytes is a severe test of any broadband connection (and may break terms of service on some contracts), which isn't necessarily Mozy's fault (although some advice to users on this point might be helpful). However some user testimony suggests that Mozy's engineers haven't put as much effort into designing a painfree restore process as they have into the backup routine.

Nevertheless, Mozy is a poster child for the new generation of online backup providers. Acquiring the company seems to fit in with the message that EMC's CTO, Jeff Nick, has been spreading around the conference circuit this year:

"... if we can expose not just applications as a service, but functional delivery as a service and if we use SOA and Web 2.0, then ... we can move to deliver global access to both consumers and enterprises. A lot of the companies that are exploring capabilities like grid and SaaS are looking to expand downstream into consumer or SOHO or SMB from enterprise. It is not about delivering capability by the pound, it is about delivering a service."

But at what price does that service get delivered? I'm not sure how exactly it benefits EMC to begin delivering backup and storage services at per-GB prices that are way below the annual acquisition and maintenance costs its enterprise customers pay. Which is why I can't help thinking about the plot of Who Framed Roger Rabbit?, which is based on the alleged conspiracy by General Motors, Standard Oil and others to buy up the Los Angeles electric streetcar network and replace it with gas-guzzling buses and freeways.

The streetcar conspiracy is one of the most widely-believed myths in LA, but it resonates because of its message about corporations using their money and influence to maintain their dominance and eradicate services that benefit ordinary citizens. I'm looking at EMC buying Mozy, and I'm thinking, is this another Roger Rabbit plotline?

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