Good morning everybody.  Welcome to the ongoing series of webinars that we do here at SOS Online Backup for existing partners and for prospective partners.  My name is Ken Shaw; I am the CEO of SOS Online Backup.

AGENDA:

In this webinar, we give a brief overview of who SOS Online Backup is as a company.  We look at the backup and DR industry particularly from a VAR or MSP or reseller’s point of view, the types of solutions that have been incumbent in the market, and the problems with those solutions.  We then look at the SOS Online Backup technology and how it solves a lot of the problems that plague traditional solutions like centrally architected tape based backup or centrally architected disk based backup.  We will then look at the SOS partner model and how partners can partner with SOS to get their own branded online backup service to sell to their customers and then we will do a Q&A session at the end of the webinar.  It will be roughly a 30-minute presentation followed by the Q&A at half past the hour.

Where we as a company our partners get the most of out of these webinars is only when there is a lively conversation back and forth.  Please feel free to ask questions at any time throughout the presentation.  Don’t feel the need to wait till the end of the presentation.  Within the GoToWebinar software, there is a question mark that you can click which allows you to type a question.  Feel free to type any questions that you want addressed and we will actually try and tailor the content of the presentation as to what the audience wants to hear about.  Start typing right now as to what you really like to see covered.  Any question that we don’t answer throughout the presentation, we will then answer at the very end of the webinar.

INTENDED AUDIENCE:

The intended audience for today’s webinar is existing SOS partners as well as prospective SOS partners.  Generally, it is MSPs, VARs, break-fix IT shops, anybody who sells IT services and products to the consumer or small business markets in particular; they are our focus here at SOS.

SOS ONLINE BACKUP – WHO WE ARE

A lot of partners ask questions about SOS to get a sense of how long we have been in the market and how long we have been in the business.  As a company, we have been around for nearly a decade.  We are founded in 2001 and we originally were founded to focus exclusively on the online backup market, which at that time was very much a nascent industry.  Though it started off as a very small industry, it has grown exponentially in USA as well as internationally.  Our focus on having Best of Breed technology has bagged us quite a number of awards like PC Magazine Editors’ Choice Online backup platform every year since 2006; Laptop Magazine Editors’ Choice award and also Notebook Magazine Editors’ Choice . Also reviews by industry press have added feathers to our cap!

As a company we focus on two areas:

1. To be the technology leader in the space.
2. To provide online backup as a platform.

We are very channel-focused company.  More than 80% of our revenue comes through the channel and from our channel partners.  We got more than a thousand channel partners worldwide.  We are a global firm with operations in North America, Asia and Europe, having more than 200 employees.  In terms of the size of our infrastructure grid, we have got 10 datacenters around the world which gives us the largest online backup cloud in the market with more than 3 million customer accounts on our system.  We have been growing at 300%.  It’s actually more a comment about our partners and their success.  Our main focus of business is getting partners into the online backup market.  We grow our revenue if our partners are successful in selling online backup through to their customers.  The fact that we have been growing so much is a really positive comment on what we can offer you as an SOS partner – on how we can get you into the market and get you successful in this space.

MARKET FOCUS

In terms of where we sit in the market relative to some other names that you might be familiar with, we are very much focused on the SMB sector.  We have got solutions tailored to Consumers and Enterprises, but our sweet spot as a company is in Small Business Market.  When we say small businesses, we really mean businesses with 5-50 employees.  The smaller end of the small business market is our sweet spot and then the resellers, VARs and MSPs that sell into that market segment.  We do have Home-User solutions.  If you have got a mix of customers, if you have consumers in your customer base, we have got some very strong online backup home user offerings and also some enterprise solutions as well.
 
THE SOS PARTNER BUSINESS SOLUTION:

The business we are in is well depicted by this slide from our marketing department.  We take all of SOS’s technology, capability, people, and the infrastructure and we filter that through your business model.  If you take (just to pick on) Garret Modigan, our goal is to take Garret’s business, understand his business, come up with an online backup solution and product that makes sense for his particular product and services mix, consult with Garret on what that will look like, help him launch his own fully white labeled and branded online backup solution to his customers with the ultimate goal being to help Garret drive incremental revenue that is recurring, very high in margin.  This is a very important part of the online backup economic model and to sell it as a managed service through to your customers.

On the screen is just an example of some of the white-labeled material we produced in the past.  It just gives you a flavor of our capability.  Anything you see that SOS does, we can completely white label for you.  If you browse through our website for example, anything you see there all of that is available as resources for you to be completely retooled for your brand, whether that’s PC software, iPhone software, web portal, mobile access, marketing material, sales material, etc., it is a full online backup business in a box.

What are the Traditional Solutions?

Let’s briefly look to the traditional backup technologies that have dominated the market over the last few years.  It really varies by the market sector that you are looking at.  In the Consumer Space, there haven’t really been any what we would call standardized approach to PC backup.  Where they have been backup solutions employed by consumers, they have generally been based around a software-hardware combination, often cheap hardware like external USB hard disk drives, USB flash memory keys and things of that sort.  Traditionally, consumers don’t have any sort of offsite backup solution.

In the SMB Space, offsite backup is far more prevalent.  It is usually based around a tripartite solution of hardware, software and then the labor component associated with running the backup.  Hardware in the small business space has nearly universally been tape over the last decade.  It is now leaning toward disk and we have got a lot of disk that is entering into the market.  From a software standpoint, we have usually products like Backup Exec or Dantz Retrospect or other type of backup applications that have dominated the space.  When we talk about the labor, we are talking about the soft costs associated with running backups on those particular technologies.  The labor involved in deploying the solution, configuring the solution, running the backup, verifying that the backup works, rotating tapes offsite, verifying recoverability on tapes etc.  In some studies, the labor cost associated with these solutions is as much as 100% of the capital cost.  If I spend $6,000 buying a tape-based backup array or disk-based backup array, I am likely to spend half as much again or as much again in the actual soft cost and labor associated with using and running that solution.

In the Enterprise, similar architecture is used traditionally.  It is still centrally architected backup solutions based around a backup server where hardware is usually a disk or tape attached to it.  From a software standpoint, it’s commonly the same application and same vendor.  The labor component is still present in the Enterprise, but we often then breakout an additional services element, often when you are looking at an enterprise backup or DR deployment.  There will be a cost associated with actually doing that deployment in the disaster recovery analysis and plan.

Charles Segal:	What is the minimum capital investment for a barebones package that can evolve as my business grows?
Ken:	We have got many options available for partners.  Our most popular package among partners is roughly a $5,000 investment, but we have got packages that start much lower than that depending upon your needs.  The best way to get a sense of what is the most suitable for you or what you are looking to do is to talk to one of our partner specialist and get an ROI model built.

Your Solution - Powered by SOS

Turning to what the public cloud backup market looks like, here on this slide, imagine Charles Segal Online Backup or Garret Modigan Online Backup or Peter Audrain Online Backup, we take all of the same constituent elements of the software, hardware, services and support, we wrap it all up into one software as a service solution that you deliver to your customers with your brand, with your pricing and we help you do all of that.

Tape Backup – Declining Market Share

In terms of the movements in the market, we have seen massive decline in both tape-based backup and disk-based backup sales.  A study by the Santa Clara Group has actually shown a drop from $2.3 BN in 2007 in the sales of tape-based backup in North America down to $1.5 BN last year.  If that trend continues, we are going to see disk and tape based centrally architected backups becoming legacy technology over the next five years.  We are seeing a tandem growth in online backup deployments.  In fact, another survey from CTO Edge Magazine of CIOs and CTOs of how many of them are going to adopt a private or public cloud-based backup solution, 71% said they are shifting all or some of their backup burden away from local centrally architected hardware to the cloud.  A question to ponder about is, “If you don’t sell online backup to your customers, somebody else is going to so why not you?”  You can nearly guarantee that your customers are going to start using online backup.  They are going to buy that from somebody.  They can buy that from Mozy or Carbonite, they can buy that from SOS, but what would make much more sense is for them to buy from you and that’s what we are here to do.  By partnering with us, we help get you into this business so that you can sell online backup to your customers.

TCO Comparison:  Tape Backup vs. Online Backup:

Just looking briefly at some of the economics of a centrally architected backup deployment, this is a real customer example of ours from one of our partners, where the solution that was being replaced costs $6,146 to put in Year-1 and had a total five year cost of $9,130 and that was across the hardware and the software, this doesn’t include that labor component we were discussing about earlier, which is significant.  With online backup, the customer ended up paying only a $1,000 a year so he had a total five year cost of $5,000 - that’s 50% less than the total cost of tape backup and the Year-1 cost was only 16%.  What I really would like to draw your attention to is your margin.  Your margin as a reseller on hardware can often be as low as 5 or 6 percentage points and it’s once off.  The reseller in question here who had sold this original backup solution only made $500 on that sale whereas selling online backup to that same customer he is now making $500 per year for five years with ongoing predictable recurring revenue.  It has excellent margin; 50% margin product with ongoing recurring revenue that ends up making five times as much revenue from that same customer by selling online backup versus selling traditional hardware-based backup.

Tape Backup/Disk/CD & DVD vs. Online Backup:

Deployment:

The deployment is usually complicated; it’s costly for you to deploy a backup solution architected around tape or disk.  With online backup, it is straight software.  It is very simple.  Just drop the client into the network and deployment is over.

Coverage:

Coverage has always been a problem with tape backup and disk-based backup.  What I mean by coverage is devices that aren’t connected to that backup regime all the time.  By the very nature, centrally architected solutions require the devices being protected to be connected to it.  Laptops are nearly always not covered because they are moving in and out of the corporate network.  Branch offices are often not covered.  Generally, distributed user data isn’t covered by traditional backup technology.  With online backup, it is actually quite a profound difference.  Every single device is connected to the backup cloud.  It doesn’t matter where the device is, if the device is connected to the cloud it can be protected.

Media:

There is no media that needs to be rotated offsite or that could fail.  IBM estimates that more than 60% of tape backup recoveries fail.  There is a study by the Gartner Group that says 70% of tapes fail on recovery.  Tapes are very unreliable and very expensive media to use for backups.

Recovery:

From a recovery standpoint, with centrally architected solutions, recovery can take days.  I am sure everybody who has been involved in doing a complete rebuild of an environment using a tape-based backup solution or disk-based backup solution; it can be a two to four day process.  With online backup, your data is immediately available from the cloud.  You can literally walk to a second computer, login and access your data in real-time.

Security:

Most of the very high profile security breaches in the last few years around data have actually been around misplaced tapes because generally tape-based backup and disk-based backup isn’t secure.  It is not encrypted.  With online backup, built into the core of the technology is military grade data encryption.  Some of SOS’s earliest customers are actually government agencies around the world, both in the US and foreign.  Security is baked into the product from the ground up.

Access to Data:

With centrally architected solutions, access to data is very limited.  It is only from the IT department.  If somebody has lost a file, they have got to escalate to IT.  With online backup, recovery can be fully delegated so that anybody can recover the data.  They can get to it immediately and in real time from any device, whether that device is an iPhone, PC, Mac, a browser it doesn’t matter.

Management:

From a management and cost standpoint, online backup is dramatically lower cost for the end customer and also a much higher margin to you as a reseller.  If you look at hardware-based backup, it provides only single digit margins, one-off revenue, expensive for you to sell, expensive for you to run and expensive for you to support.  With online backup, you can be earning more than 60% gross margin on the product you sell with recurring revenue.

What we here at SOS strive to do for our partners is we try and convert backup from a major pain point both for your customers and for you and from a cost center because often supporting your customers backup arrangements can actually be very costly for your business and we want to turn that into a sales center and a profit center for your business.

Don Gonzales:	What type of encryption is used?
Ken:	We use 256-bit AES encryption on the PC client prior to transfer.  We then transfer the data over a VPN tunnel to our datacenters and then we encrypt at 1024 bits before we put the data into our storage and archiving layers; extremely strong encryption and three layers of encryption throughout the system.
Peter Audrain:	I would like to get details of SOS compared with other online backups rather than comparing against offline backups.
Ken:	Sure.  The reason we focus on hardware based backup in these presentations is because by far the biggest competitor you are going to face in online backup is traditional hardware-based backup.  Still 90% of backup of small businesses in America are using hardware-based backup technology.  When you go out into the market to sell online backup, you are actually going to be facing competitive technologies more than competitive vendors and that will change overtime.  Right now, there is a huge market opportunity mainly to replace legacy technology as you move your customers to online backup.

THE MOVE TO ONLINE BACKUP IS UNDERWAY

Industry Overview & Market Opportunity:

We often get a lot of questions from partners about how large is the online backup market?  The answer is depending upon who you talk to.  A better understood metric is how large is the overall backup market?  It is roughly $10 BN market annually split between hardware, software and services.  Current online backup market today is about a billion dollars in value and that is again split between Enterprise customer, Small Businesses, and Consumers.  Where we are seeing the most rapid adoption of online backup is in the small business space.  We are seeing 33% year-on-year growth of online backup particularly in the small business space.  A follow-on question we often get is, Am I too late to get into the market?  Have I missed the boat?  The answer to that is absolutely not.  We are still at the early stages of a massive adoption curve into online backup.  Some pundits are estimating that online backup is going to capture as much as 80% of the overall backup market in which case it is likely to grow to being a $7 BN or $8 BN market annually, today it is only about a billion.  Whether you look at surveys that look at the economics of the backup industry or whether you look at data that talks about what types of technologies small businesses are using today to backup, the majority of the opportunity is still ahead of us.

PRODUCT & TECHNOLOGY:  THE SOS CLOUD SOLUTION

Online Backup is the Cornerstone Technology for Using Data in the Cloud:

In this part of the presentation, we will actually compare and contrast a lot of our technology to other online backup vendors in the market.  If that’s your particular interest, that will probably come up in this section and feel free to ask questions about any particular competitors and I will do the best to answer your questions.  The best people to talk to are our partner specialists and they are standing by to talk to you anytime.

The SOS product has always been about three core concepts - three pillars to our product management architecture and that’s always been Protect, Access, and Share.

Protect is really about backup and restore.  We have always aimed to have the best online backup product for hardcore backup and recovery.

Access is about being able to access your data and consume it from any device, whether that’s an iPhone, iPad, Blackberry, Android, PC, Mac, browser it doesn’t matter.

Sharing is the ability to then transform that data and make it available to business colleagues or to friends and family for consumption in different ways.

Access and Share are often overlooked as consumer type features, but I can assure you they are not.  As much as 30% of the sales to businesses that we do as a company now, Access and Share are listed as the key elements in that purchase decision.  The Access and Share functionality actually transforms the way you use your data.  There is a great anecdote from one of our partners where he had a customer who called him, that was a Sunday, and the customer said look three years ago we put together this PowerPoint presentation and I know it’s in the backup so I have deleted it from my PCs and I need it tomorrow morning 9 a.m.  That was his request to Gregg, his IT vendor who is a partner of us.  Normally that would have been an impossible task.  There is no way to find a file three years ago from tape backup archives with a 12-hour window and if there was, it involves going and getting the tapes from an archive, going through them all, searching through that data, potentially recovering massive amounts of data.  Gregg, our partner was playing golf at that time. Gregg happened to have an iPhone, using the SOS application, searched his five years’ worth of data in the cloud, found the file in question and sent it to the CEO all without leaving the green.  It is a whimsical little anecdote, but I point it out because the SOS cloud backup platform actually fundamentally changes the way we can access and share our data once it is protected.  Once that data is in the cloud, we can now do new things that we couldn’t do before.  I am not aware of any other technology that allows you to sit in one position and search all of the PCs that you are managing and get that data in real-time when you might be searching terabytes and terabytes worth of data and years and years’ worth of data.  There is just no other technology in the market that allows you to do that and you can do that with the SOS technology.  The three pronged product development philosophy that we have here at SOS makes a big difference.  None of our online backup competitors focus on access and share and that is a big failing of all of the other competitive platforms and a major benefit of the SOS platform, which you would be using to sell to your customers.

SOS CORE TECHNOLOGY

• Access your data anytime anywhere.

• Share your backed up data with friends and colleagues.

• Rich media access and streaming of content to mobile devices – it’s a more business grade functionality.

• Full integrated local data backup stack – you don’t need to stop doing local backups.  In fact we recommend everybody continue to do local backups and to that end we have a fully built-in local backup to the product.

• Unlimited Data Archiving – With Mozy and Carbonite and the other online backup technologies, if you delete a file from your PC, they then delete that file from the cloud.  We don’t do that.  We continue to hold that file in the cloud until you tell us to delete it from the cloud.  What that means is that product is also an archiving tool.  Where you got customers who have requirements to hold data for a certain period of time, for example under Sarbanes-Oxley some companies have to hold data for up to 7 years, they can use the SOS technology with your brand on it to actually fulfill their archiving requirements.

• Backup Unlimited PCs – With Mozy and Carbonite and other online backup technologies out there, it is all licensed on a per seat basis.  You might actually be backing up no data to the cloud, but you might have 100 devices and actually be paying $300 or $400 a month simply for the license fees.  Mozy charges $3.95 per seat per month.  With SOS, there are no license fees.  You can have an unlimited number of computers connected to an individual backup account and that is one of the things that make the technology very powerful.

• Backup Unlimited Versions of Data  – We actually retain an unlimited history of versions at no cost to you and at no cost to your customers.  If you have got a file that is changing every single day, we will store 365 different versions of that per year until you tell us not to, you can trim that.  The product actually doubles as a rudimentary document management system, but it also enables a recovery system which is timeline based.  This calendar wizard in the middle of the recovery wizard will allow you to pick at any point in time and get a snapshot of all your data as at that point in time from a historic standpoint, which is an extremely powerful tool for businesses.  Talking about one of the questions we get about unlimited versioning is who pays for that?  I don’t want to pay for all that storage.  The answer is SOS pays for that.  You don’t bear the cost for that, the customer doesn’t bear the cost for that and this is really one of our set-apart features.  Those are one of the reasons why we are Sarbanes-Oxley compliant and HIPAA compliant.  You can sell the product as a HIPAA compliant backup solution into the medical industry and as a Sarb-Ox compliant backup solution to the financial services and legal sectors.  Nobody in the market has this option.  Mozy and Carbonite keeps 30 days’ worth of versions.

The archiving and unlimited versioning are the things that we do which completely makes us stand apart along with a fully integrated local backup and all of the access and sharing functionality that is completely unique to SOS.

• Multi-site Data Replication – Our global data grid has 10 datacenters around the world which I think is one of the broadest data grids than any of our competitors.  Most of our competitors have one or two datacenters.

Some of the other features worth calling attention to are:

• Continuous Data Protection Module – This is a competitive differentiator.  What I am talking about here is the ability to have the product watch a particular file or set of files and then as soon as that file changes, to protect that data up to the cloud.  Most of our competitors will try and simulate this.  They will check files every 10 minutes, but that is actually extremely resource intensive and not a good business solution at all.  The SOS system installs a true CDP module, so it will install a watchdog in the file system and only use any resources, memory or processor time if there has actually been a change of that file in the system.

• Physical Media Upload:  This is a system that we pioneered.  We are the first online backup company to do this.  This is where you can send the initial seed backup or the baseline backup in on a hard disk drive and we will upload that data to the datacenter for you.  

If there is any questions about the SOS product, please type them out or call in and talk to one of our partner specialist and get a full product demo.  They will take an hour and actually walk you through all the technology and show it to you in a one-on-one GoToMeeting session which is I think one of the best ways to get a real sense of the technology.

SOS PARTNERSHIP MODEL

The SOS partner model is a very comprehensive program.  It has got 7 key elements as outlined here in the diagram.  We take our infrastructure, products, marketing solutions, sales support, training and technical support, billing, shopping cart and e-commerce solutions wrap all of that up and we deliver that to you with the goal being to deliver a fully branded experience for you and for your customers so you can derive immediate recurring revenue.  We have got partners who earn 60%, 70%, 80% gross margin.  It is an extremely high margin product that you can sell to help build your brand, drive revenue and increase customer retention.  They are the three of the leading reasons people partner with us to get into the online backup market.  Everything we do is Platform as a Service, so everything you see in SOS was constructed to actually provide it as a platform for our partners.  All of our backend services are accessible and are re-brandable.  All of our software can be completely skinned.  All of our marketing material is provided to you and is re-skinnable.

Peter Audrain:

Do you have any info on backup speed, e.g., a range of time for 50 GB backup for average connection speed in a reasonably modern system?

Ken:

It totally depends on the bandwidth.  If you are on a FiOS connection with 15 MB up-speed, that is going to take an hour or two.  If you are on a DSL connection with 256 KB of up-speed, then that could take days.  There are two major variables.  First, does your online backup vendor throttle?  All of our competitors do, we don’t.  You can upload it up to 100 MB if you have got a 100 MB connection and that’s a big competitive differentiator.   Secondly, what is your upload speed?   That is the most dominant variable.  The third variable we would look at comprehensively is the type of data that is being backed up because compressibility of data varies based on data type.  Databases and other text based structures will compress very heavily and compress very well and therefore transfer quickly whereas rich media things like photos, music, and video doesn’t compress particularly well and therefore is quite slow.

The SOS Partner Business Solution

Infrastructure: 

You get access to our 10 datacenters around the world which we completely manage for you that are pretty much transparent to you.

Product & Software:

All of our products are completely white labeled and delivered according to your brand specifications.

Billing:

We have got a rich billing API that you can hook into.  Otherwise, we have got two other billing models with one where we can provide you with a shopping cart and second where you can simply purchase accounts from us as you need them and then on-sell them to your customers and bill your customers the way you currently bill your customers, which is often preferred by mid-market VARs who already have billing relationships.

Marketing Support:

The Partner Resource Center:

I recommend everybody attending today’s webinar checkout our website.  If you click SOS for Resellers and then click into the Partner Resource Center, you will get a sense of all of the rich marketing and sales material and support that we provide to our partners.

• Email Templates - Templates that you can send to your customers to generate interest.

• Pricing Guidelines - We have got an eBook that actually shows you the different price points in the market and the best way to position and price your online backup product depending upon which market you are selling to.

• Sales Presentation Templates - For example, a version of the presentation I am using today is there available for you to be re-skinned for you to use with your customers.

• Full Disaster Recovery Plan Template - This is actually a 50-page document developed by ITIL certified system engineers which we give to you for free for you to use with your customers.  Most of our resellers actually sell this to their customers and put a monetary value of $500 or $1,000.  We provide that for free for you to provide as part of the holistic backup solution for your customers.

We provide proposal template documents, sales guides, and whitepapers.

We provide prerecorded trainings that are available to you in the partner resource center product datasheets. 

Live trainings – we have live trainings running every single day for our partners that you can join and there are three major topics:

1. How to work with the SOS systems and support.
2. Online backup technology in the market.
3. Sales training.

We got a lot of partners coming to us who are small IT shops who don’t feel confident that they can go out and sell this in the market.  To that end, we provide sales and marketing training every single day that you can join and access recorded trainings so that you can leverage the best marketing and sales practices from among our thousand partners which I think is an extremely powerful resource we deliver to our partners.

Support:  We have got an extremely deep set of support resources available to you.  As an SOS partner, you will have no less than four people working on your account. 

• A partner specialist that you will work with to become a partner. 
• A partner delivery team consultant who is the person who works with you and analyzes your business to help create your custom online backup product based on our technology.
• An account manager who will basically stew at your partnership with SOS for the lifetime of your partnership with us.
• A dedicated support technician who is assigned to your partner case.

The depth of resources that we can bring to bear to help you succeed in this market is second to none and really there is no other online backup company in the market who can give you the support that we can, whether it is sales support, marketing support, training or technical support.  We hear a lot of stories from partners who say I became a Mozy partner, never heard from them again so I am leaving them.  We have similar stories about Intronis and other vendors.  We have really focused and invested very heavily in building out what we call the backend of our partnership model or more specifically the training and resources that you need to actually be successful once you are in the market.  We don’t just deliver the technology to you and then let you fend for yourself; we really make certain that we are with you through the life of your partnership because frankly if you don’t succeed in the online backup market, then we don’t succeed.  Our whole business model is based around our partners’ success.

Online backup Revenue & Margin Opportunity – Case Study

Just looking at a case study of one of our more particularly successful online backup vendors:

Total revenue earned from online backup:  $70,800.
Total profit: $58,000.

It is an 82% gross margin on the product that he sold and whilst not everybody on the line is going to aspire building this much of a business around online backup, in this case they are driving nearly $6,000 a month in ongoing revenue from online backup that was sold through to their customers, but this gives you a sense of the profitability of the product that you can really strive for.  Our partners who have the greatest success selling online backup don’t sell it on a per gigabyte model so I would really encourage you not to think about selling this on a per gigabyte model.  You buy from us on per gigabyte model, but the best way to sell this to your customers is a full and comprehensive backup solution.  You would sell a risk and impact assessment, you would sell them a full disaster recovery plan, and you would then give them full data protection for all of the PCs in their business, you would offer monitoring services and management;  all of which we are delivering to you, you are not doing any of that, we are giving it all to you, but you can then position that as an extremely high value business service, which they pay a flat fee for, for example $500 a month, this partner used to sell at $750 a month.  Under the hood, you have got some gigabyte that you need to allocate to them which you buy from us.

In this way, a lot of our partners make extremely high margin, as much as $20 and $25/gigabyte/year from a revenue standpoint usually buying from us at $7 or $6 or $5 depending upon the volume that they are buying from us.  Obviously, you get volume discounts from us the more you buy.  This is an example of an ROI model.  By calling in and talking to our partner team and asking for an ROI, they will ask you a bunch of questions and they will apply some knowledge they have got from working with our thousand or so partners in the market to give you a sense of what you can expect in revenue, expense, uptake, break-even point and cash flow.  The comments we have received from the market is, it is one of the most comprehensive and educational tools available in the online backup market for you to assess whether or not this is a good business opportunity for you.  The #1 takeaway from the webinar today I think, you should call in and get our consultants to give you a free ROI analysis when they walkthrough the product.  To go in the running for the kindle giveaway, you are going to call in as well.  We will be announcing the promotion code and details of that at the end of the webinar.

Re-branded Product & Marketing Support:

Here are some examples of some skinned product and also marketing collateral that we provided for various partners.  Another example of some of the tools we offer, this is the SOS Vulnerability Scanner that you can find on our website.  The vulnerability scanner is designed for you.  You give it to your customers.  It scans their computers, finds a bunch of data that needs to be protected and then warns them of their total exposure.   You can see that this particular PC being scanned have 65,000 files, 8 GB of data puts at risk of being lost.  This is branded for ETTE, one of our partners.

This is an example of the types of branding of our various tools and marketing tools that we can provide to you beyond our core product.  We have talked about the depth of our support that we give to you both in account management, training, and sales support. 

Sales Support:

Very common comment we get from partners is I can’t sell this.  I have got 3 customers that wanted today, but we are a tech shop with three technicians, I don’t really think I can go out and create a market, so that’s where the SOS sales support program comes in.  Your partner specialist who works with you will actually stay on with you and help you close your large opportunities.  A lot of our partners will bring opportunities on to conference calls and introduce the SOS partner specialist as a member of their team.  SOS staff as a matter of practice will never identify themselves as SOS, but will identify themselves as part of your team, you introduce them as your backup specialist and our sales team will actually help you close those sales, which is a very powerful team-selling approach that seem to be very successful in the market.

WHY PARTNER WITH SOS - YOUR BENEFITS

Technology:

Our technology is market leading from our local backup, CDP, and multi-site replication all the way through our rich access and recovery options.  It really is a product that can be deployed in Consumer, Small Business, and Enterprise and we have been the technology leader in this space year in year out.

Price Point:

In terms of cost to you, we are the lowest price provider in the market.  Despite the fact that we are the premium technology provider, we still won’t be beaten on price.  We will work out very attractive rate at which you can buy from us.

Delivery & Support Infrastructure:

24x7x365 delivery and support around the world, dedicated account manager, dedicated technical and sales training, dedicated support representative.

Economics:

We are best placed to get you into the online backup market rapidly with the best product available and help you derive extremely high gross margin with an immediate return on your investment with recurring revenue streams with a new powerful managed service that you are offering to your customers, which is cheap for your customers at a much lower total cost of ownership for them, provides a much better quality of service for your customers and for you in your business provides you with a much more profitable recurring and predictable revenue stream.

For those of you who are sick of my voice, you can call in and talk to a partner specialist.  To go in the running for the Kindle giveaway, you need to call in and say that you have attended the webinar today, the Thursday’s webinar and you have to quote the promotion code.  The promotion code for the webinar today is KDX2509.  Call 877-896-3611 Extn. 2 for sales and quote the promotion code KDX2509.

Q&A SESSION
Peter Audrain:	Any more info on total cost to partners?
Ken:	It really depends.  We have got a lot of different partner packages.  We have some partners who pay us a million dollars a year.  We have some partners who pay us hundreds of dollars a year.  If you perhaps ask more specific questions, I will answer them.  I am not trying to be vague; it really just does vary dramatically.  We have got very broad spectrum of partners in our partner ecosystem from large billion dollar software companies all the way down to two man break-fix shops.  Most of our partners are in the small two or three employee space with a mixture of home user and small business customers.  That is really where the majority of our partner sits.
Garret Modigan:	You talked about multiple computers, can they be isolated?  In other words, Joe and Sue backup their computers; can Joe be restricted to only see his and not Sue’s?
Ken:	Absolutely.  The way you would do that is you have two different accounts.  You just provision two different accounts and you install different account on each PC and then only the person with the access credentials can access any of the data.
Peter Audrain:	At the lowest end, I have a couple of dozen SOHO clients.
Ken:	It all depends on the amount of space that you need and then pricing varies based on the amount of space that you need.  Depending upon what you need to sell to those clients, couple of SOHO clients, let’s say you have got 500 GB worth of data that needs to be protected, your cost on that over a 12-month period might be a few thousand dollars and you should then be able to sell that for $9,000-$10,000.  I am just briefing off the top of my head.  The best thing is to talk to one of our partner team and actually give them the numbers, give them the number of your customers and how big they are and then have them crank out a quote for you.
Garret Modigan:	Can those separate accounts be combined under umbrella account?
Ken:	Yes.  All of your accounts are combined under your umbrella partner account so you have got a partner portal where you could see and report on all of the different data associated with your different customers.  You can provision accounts, you can get reports, you can see the backups that have been run, and you can see if there are any issues with backups so it’s all under your umbrella reseller account.
Garret Modigan:	Company ABC has five employees.  Can the customer have an umbrella account?
Ken:	Yes, you can.  We use what we call Blue Sky sub-accounts.  We will maintain a customer file for that particular business and then have multiple backup subscription accounts all tied under that company entity in our database.  They can all be tied in one in that way.  That’s through our Blue Sky team.  It’s not as perfectly automated as we would like.  Our Blue Sky team is our customer care unit.  You would be working with your account manager when you needed to do that.  If you have a customer where you needed 5 subaccounts within a parent account, you would work with Blue Sky to get that done.  We are going to have that available for you to do automatically in the upcoming release of our partner portal, but it is not in the partner portal yet. A question that I have got to the audience is this. What would stop any of you on the line today from becoming an SOS partner?  What is the obstacle?  Is it price?  Is it you are not sure about the market yet?  You are still evaluating?  Are you ready to go?  Are you ready to sign up right now?  I would really appreciate the understanding.  I don’t ask this question every time we do this.  What is it that stops you from becoming an SOS partner today?  I really mean that.  We need to get more information about the technology, need to understand more about SOS as a company, need to evaluate the market more or don’t want to spend the money or I am ready to go, I really would like to have a discussion around that.
Peter Audrain:	Any problems backing up active SQL databases or other open files?
Ken:	Always there are problems with SQL databases.  As you know, this is a tricky area of backup.  What we recommend our best practices and recommendations for this is to setup SQL server to backup to a local backup file and then to backup that file with SOS and that’s the most reliable and safest way to be doing it.  There are other configurations that you can deploy, but that’s the one we recommend and if you follow that you won’t have any trouble.
Don Gonzales:	Can the iPhone app and android websites be re-branded?
Ken:	We give you a fully branded mobile app as part of our larger partner packages.  Our silver and gold packages get a fully rebranded mobile app.  For us, that’s m.sosonlinebackup.com and that works on droid, blackberry, iPhone, it’s tailored to that 100 different smartphone devices so that is available for you.
Some of the people on the line says still need time to learn and talk to customers, some others saying price, we got some people who balk at paying at $240 per year for 5 GB of critical data only being able to sell minimum quantity.  Let me deal with the price comment first.  $240 a year for 5 GB, I expect that’s excellent margin.  It is at $50 a GB per year.  Far from thinking that struggle which your comment sort of implies, that’s terrific.  If you could maintain that margin across your customer base, you would be one of the most successful online backup vendors in the market.  Your cost is likely to be at 10% by the way.  If you can continue to get customers to pay you $50 a GB or $240 a year in this case, then you are going to be making $45 per GB on that.  Time to learn and time to talk to customers - On that, I really recommend you talk to our consultants and get a mockup.  What a mockup is, it is actually a marketing flyer that we will produce for you.  We deliver many pieces of marketing collateral to you if you are a partner.  One of the things we will do for your presales, before you become a partner is to help you test the waters by providing you with a mockup of your branded online backup solution.  We will take the one-page product sheet - a sort of brochure and attach your branding and image onto it.  These will be free of charge though it could it take a couple of days.  It is the perfect tool for you to then use.  You can actually email it out as you have already got your service up and running.  You can print that and send it out or you can email it out and that is a terrific way to drum up interest and actually help build your sales pipeline even before you are in the market.  That’s one of the other things you can ask our partner specialist for and that applies to couple of other comments we got here from partners. Would there be any other objections or reasons for you  not getting  into the market today , we could perhaps discuss on those and for any other questions about the technology or competitive vendors , do get back to us .(that I could talk to or perhaps discuss or any other questions about the technology or competitive vendors really anything.)
Charles Segal:	Dropbox gives 100 GB for $240?
Ken:	That may true.  A few comments: Firstly, Dropbox is a purely consumer solution.   It is not business grade.  It is not secure.  Data is not encrypted.  Dropbox employees can see the data.  It is not HIPAA compliant.  You could never sell it to any businesses. Secondly, I am not familiar with the Dropbox reseller program, but I am pretty sure that you wouldn’t be getting 50% of that; I would be surprised if they would give resellers more than 10%.  I think Dropbox is an affiliate program. Thirdly, it is a sinking tool.  It is really not a proper backup tool.  Sink is good for small amounts of data, but when you need to backup hundreds of gigabytes or terabytes or databases of complex data, it just really doesn’t fly.  Dropbox is a nice product for college kids and housewives and people who want to protect some music and photos, but it is not something that the backup industry at this point takes seriously as a competitive threat to backup.  Frankly, businesses always going to need hardcore backup and recovery.  Sink is an emerging market and we get a lot of questions about this.  What is the future of sink versus backup?  They have always been pretty distinct and we believe there will always be very distinct business needs backup and sink can replace that for consumers, but not for businesses.
Charles Segal:	Most of my clients are housewives.  Give me a package for housewives?
Ken:	We do actually have a pure home user offering, that’s not a limit to working with us.  It might present you with some competitive work that you have got to do when you are selling to those housewives, but I think you can actually use some of the very points I was using about the limitations of sink.  We still have got a lot of those consumer type features in the product of photo albums and sharing and the ability to publish heterogeneous media galleries online and a lot of features that are attractive to home users.
Peter Audrain:	What is the lowest initial outlay for resellers?
Ken:	Off the top of my head, I don’t know what is the smallest package is, its hundreds of dollars a month or perhaps even lower, but it all depends on the number of gigabytes you need, that’s what it all bolts down to when you are buying from us.  Our partnership program is called a “wholesaler model” and the nomenclature really comes from the fact that we sell at wholesale rates cloud storage to you for you to then on-sell it as a high value bundled service to your customers.  It really depends on your numbers.  I think you mentioned earlier working with Lynn.  Lynn is terrific.  I would work with Lynn and she can give you a definite answer on that question very quickly.

It has been a pretty good dialogue.  Thank you everybody for your participation in today’s webinar.  I hope you have learned something.  I hope it has been useful.  I will get something out of these and it has been great to have such lively discussion with a few of you.  Thank you all.  Remember to call in to go for the Kindle.  Get an ROI model while you are there and find out about the mockup and get a product demo if you have got time.  Otherwise, hope to see you again at future webinars that we do here at SOS.  Have a great day.