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Data protection and cyber security vendor Acronis made an unusual purchase last week by acquiring 5nine, a software company that deals in hybrid cloud data management.
Acronis' products generally focus on backup, disaster recovery (DR) and security. And while security is a component of 5nine's core product, 5nine's main role is simplifying data management between Microsoft Hyper-V and Azure cloud environments.
Ezequiel Steiner, senior vice president of corporate and business development at Acronis, said 5nine's management and orchestration capabilities complement Acronis' cyber protection. He said Acronis was also interested in 5nine's security capabilities such as firewall, antivirus, antimalware, intrusion detection and network analysis. Acronis plans to integrate that technology into Acronis Cyber Cloud.
"They help us accelerate our vision of cyber protection," Steiner said.
Steiner said Acronis will continue to offer 5nine's current products and gradually integrate the technology with Acronis Cyber Cloud over the next year or so. 5nine itself will operate as a subsidiary of Acronis, with the eventual goal of full integration into Acronis.
Steiner said there is no intention of laying off any of 5nine's staff, and Acronis plans to increase 5nine's workforce.
5nine CEO Karen Armor said she was not looking to sell when Acronis approached her in the summer of 2019, although 5nine was always open to an acquisition. Acronis' global reach and distribution channel were attractive to 5nine, Armor said.
"We're happy to be a part of a global organization," Armor said.
She said 5nine has just over 500 business customers using its paid products and more than 30,000 users of its free products. The company has a strong legacy base of Microsoft Hyper-V hypervisor users, and Armor said Acronis' acquisition was an opportunity to expand that base.
Acronis closed a $147 million funding round in September 2019. Founder and CEO Serguei Beloussov said the money would help complete acquisitions Acronis was working on at the time, as well as boost research and development.
Over the past year and a half, the backup market has seen major funding followed by mergers and acquisitions. Backup vendor Cohesity had a $250 million funding round in 2018 and later acquired Imanis Data in 2019, and cloud data protection vendor Druva closed a $130 million funding round in June 2019 and then bought CloudLanes a month later.
Marc Staimer, president of Dragon Slayer Consulting, called the 5nine acquisition an interesting and unexpected move. He said 5nine's Hyper-V and Azure hybrid cloud management is not a natural fit to Acronis's backup-as-a-service and disaster recovery-as-a-service offerings. Although Acronis has said integrating the security functions of 5nine was its primary motivator, Staimer said it's more likely that Acronis will use 5nine as an expansion into the hybrid cloud management market.
"It doesn't appear to fit in with their current business, so it strikes me as they're expanding into different areas," Staimer said.
Staimer described the 5nine acquisition as a line extension of Acronis' portfolio while also noting the backup vendor's tendency to completely absorb its purchases. He said from a strategic standpoint, it makes sense not to keep the smaller company's branding if it doesn't have enough recognition.
Staimer said Acronis now has to be careful in how it markets its offerings. He said calling something hybrid can have multiple meanings, and customers may end up disappointed when they expect something Acronis can't deliver. Ultimately, Staimer would like the term to mean being able to flexibly shift resources between on-premises and cloud, but he's noticed vendors increasingly defining it as simply running applications on-premises and using the cloud for DR. "'Hybrid' is a buzzword that covers a broad swath. Terms get muddled all the time in tech," Staimer said.