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While there are many positive aspects to Tuesday's announcement that Barracuda Networks Inc. will acquire privately held Intronis Inc., the driver for the purchase is clear: Barracuda gets a ready-made, 2,000-partner strong managed services provider (MSP) channel. The acquisition price was $65 million.
Intronis, a channel-centric company based in Chelmsford, Mass., has an impressive MSP customer base that drives about 95% of the company's revenue in North America. Barracuda, on the other hand, has a strong value-added reseller (VAR) channel of about 5,000 partners, but lags in its MSP presence, with only 200 MSP partners, compared to its competitors. Partners at Barracuda also drive the bulk of company revenue.
"The channel is key to the whole story," said Dave Simpson, senior analyst with The 451 Group. "The main motivation and the main gain for Barracuda is Intronis' strength in the MSP market," he added. Intronis, a backup and data protection vendor, delivers platforms designed specifically for MSPs.
Brian Babineau, vice president of product and channel marketing at Barracuda, stated it a bit differently. "We're not just purchasing Intronis for the channel. They have a lot of other things that allow them, and now us, to address a specific segment of the channel. They don't just have partners. They have a state-of-the- art technology platform and a business model specifically built for managed service providers," he said.
With the acquisition, Barracuda also gains the Intronis ECHOplatform Partner Management Portal. Barracuda did not have an equivalent management platform.
Barracuda did its homework when identifying a company to acquire. There's only a 10% overlap in the vendors' partner networks: 90% of Intronis' MSP partners are not Barracuda partners. "Only 37 of Intronis' top 200 MSPs are also Barracuda partners," Simpson said.
Just this past April, Barracuda formalized its partner program, adding MSPs to the mix. Aaron Dun, chief marketing officer at Intronis, noted that the company didn't have a traditional partner program, since MSPs constitute the vendor's customer base. Instead, the company offers a rich enablement program, providing partners with the tools they need to be successful in their business, such as sales enablement and marketing tools, he explained.
Babineau stated that Barracuda plans to add technology to the robust Intronis platform as well as increase the number of MSP partners.
Expansion will come from the U.S. but also internationally, he added. Prior to the acquisition, Intronis' 2015-2016 business strategy included expansion overseas. With the acquisition, Intronis will right off the bat gain access to Barracuda's worldwide presence with offices in 15 countries, global experience, sales force and seven data centers.
For now, partners at both Barracuda and Intronis can expect business as usual, according to the vendors.
Intronis MSP partners hope to maintain level of support
While partners want to be optimistic about the deal, MSPs have concerns about losing the intimacy they had with Intronis.
"We work well with Intronis. They'll take a phone call from us. We can talk to management and do a demo when we need to. I hope that will continue," said Kurt Simione, owner of Technology Seed, an IT support company based in Salem, N.H., and an Intronis MSP for about six years.
While Simione wasn't surprised to hear about the acquisition, he noted that he's been a satisfied Intronis partner who has had a lot of success with the vendor, its products and support. His main concern is retaining that personal touch after the Barracuda acquisition.
Likewise, Justin Lutteroty, technical sales executive with SRMS Network Technologies, a computer services provider based in King of Prussia, Pa., and an Intronis VAR partner for about seven years, said that he never had trouble getting a response from Intronis, but couldn't say the same for Barracuda. SRMS is also a Barracuda VAR.
"If I don't have trouble getting through to Intronis once they move over to Barracuda, then it will be alright. However, I'm worried, because Barracuda is so big and I've worked with support at Barracuda. It's much harder to get a response," Lutteroty said.
Barracuda has more than 1,000 employees, compared to more than 100 at Intronis. Also, while both companies focus on the small and medium-sized business (SMB) market, Intronis defines an SMB as a company with 5 to 1,000 employees and focuses mostly on the smaller-sized companies, while Barracuda defines SMBs as companies with 100 to 5,000 employees and focuses more on the mid-sized organization.
Partners can expect normal communications with Intronis as if nothing has changed, Babineau said. "Our goal is to keep all partners informed. What they can expect is even more communication and hopefully more products and solutions to sell," he said.
The acquisition is scheduled to close sometime this month, according to Barracuda.
A broader look
Taking a broader look at other aspects of the acquisition, it appears to be a win-win for both vendors and their partners.
In addition to gaining an MSP channel and extended market reach, Barracuda also gets access to Intronis' deep support of Hyper-V and image-based backup capability, according to Simpson.
There are also several pluses for Intronis in the acquisition. For starters, the company gets Barracuda's appliance technology, something that was sorely lacking in the company's product line compared to its competitors.
"Barracuda is very strong in appliances from the low end to the high end," said Simpson, who added that partners should expect to see Barracuda initially offer "as is" appliances to Intronis customers and then, down the road, customize those appliances for the Intronis software.
Dave Simpsonsenior analyst, The 451 Group
"That's a huge win for Intronis. I imagine they were going to try to do it on their own. They're one of the few companies in the hybrid cloud backup market that doesn't have an appliance," he said.
"Intronis doesn't have that, so they'll also get cloud-to-cloud backup, or SaaS backup capabilities," said Simpson.
Simpson was a bit surprised to learn about the Barracuda/Intronis acquisition, but was expecting consolidation in the hybrid cloud backup and recovery market for some time now.
"While it's a fast growing market -- 22% CAGR over the next few years -- it's a crowded market given the dollar volume. It's ripe for consolidation. There are too many players and not much differentiation," he said. Don't be surprised to see more deals over the next six to eight months, he added.
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