Datto is looking to disrupt a highly commoditized market, attract a significant number of new prospects for its channel, and provide upgrade options to better monetize the offering.
Backup and business continuity provider Datto has entered the sync and share market. Its Datto Drive solution, aimed at Datto’s traditional SMB market, is intended to disrupt that market, by being priced lower than incumbent vendors, and being offered for free for a year to the first million subscribers. The free offer in particular is also intended to bring in a flock of new leads that Datto can then turn over to its partners.
“We want to flood the market with this to generate leads we can bring to our MSPs,” said Pete Rawlinson, Datto’s CMO.
Datto Drive has already been released to Datto partners in a closed environment, so they can invite their clients in.
“Today is the day that it gets announced to the world,” Rawlinson said. “Customers can now register with us even if they don’t use an MSP. This isn’t a direct play however. After the free year, they then have to have an MSP. This will be a door opener to SMBs that haven’t used an MSP before.”
Datto anticipates customers will stay after the free year because the price is lower than current market norms, and because the product is a quality one.
“Datto Drive will have an MSRP for customers of $10 dollars per terabyte, in comparison with the $15 that Dropbox charges,” Rawlinson said. This covers an unlimited number of users in an organization, and comes with a free TB of storage per domain, which Rawlinson said should be fine for most small businesses. Beyond the free year, there is no core freemium element to the offering, however.
“98 per cent of Dropbox is free, but for commercial accounts, this is a mixed blessing, because people create multiple accounts to take advantage of the free model to save the 15 per month, and add to their administrative costs as a result,” he indicated.
Datto Drive does have two premium tiers of its own beyond the basic $10 a month, and that, Rawlinson acknowledged, will be the main profit source for their partners.
“The differential between the price the MSP pays to us for Datto Drive and the $10 they resell it for is not where they are going to make most of their money from this,” he said. “The money comes from the additional conversations this will generate. This includes two premium tiers with additional capabilities like geolocation of data, to monetize file sync and share.”
Rawlinson said that they expect that customers will be more likely to upgrade from a pay-a-little model to a pay-a-little-more model than they have been to upgrade from the free to pay offerings of the freemium vendors, whose conversion rates remain in the low single digits.
“We absolutely expect a decent percentage to upgrade to the premium model,” he said. “We are already seeing an interest in upgrading.”
Datto is able to charge less for the service, and give away a million TB of storage for free for a year, because they make their own hardware for their private cloud, in their production facility in Monroe CT.
“We are able to control our costs and quality,” Rawlinson said. “Our competitors have to pay a third party for storage, while we create our own. That’s how we can offer an Exabyte for free for a year.” Rawlinson said that customers don’t have to use the Datto Cloud to use the service, if they don’t want to move data, or are familiar with something else, but said that longer-term it’s in the customer’s best interest to do so.
The file sync and share technology itself comes from ownCloud, an open source, self-hosted file sync and share app platform.
“We’ve been working with the ownCloud open source community for file sync and share, and we built Datto Drive based on the ownCloud platform, under license,” Rawlinson said. “It’s tried and tested, and completely cloud based, and because its open source, there are additional extensions for additional security or collaboration.”
