@Strawman I agree, On reflection what really matters here, I think, is how the MSPs respond. Does it simplify things for them to push an integrated $MSFT offering to the end customers, or do they add more value to their customers by highlighting the benefits of the $DSE independence? Even if they offer both options, all things being equal, which way do they nudge their clients? $/seat for the end user might not sway things if the MSPs can make more money another way. That was perhaps gap in Charif's narrative, so it would be great to be able to get him into the smiling Strawman star chamber ;-)

I know enough small and medium business owners to know that most don't have much of a clue (in truth, like me) about the technicals of data security, and look to the advice of their MSP. It's arguable how much the MSPs really know themselves, sometimes. But I think they are the customers that really matter here.

Any Strawpeople working as MSPs selling IT solutions to small and medium business? Roll-up Roll-up.

@mikebrisy I think you are hitting the nail on the head here. DSE's customers are not the end users but the MSP's and the value proposition is the incremental margin you can drive to them. I would think if an MSP can upsell an SME client to the branded MSFT offering (with AI overlay?) for a higher ARPU, that is the way they would lean.

I think often the market overreacts initially to news such as this, but this could be one instance the sell off is pretty rational, especially given DSE's valuation prior.

@mikebrisy and @Wini both have excellent points here.

Few points against $DSE:

• Every MSP who sells Dropsuits is most probably also a reseller of Microsoft licenses - essentially MSPs will have to deal with only one vendor
• Microsoft Syntex will be high cost, but it will have more AI features ( bells and whistles ) that only Microsoft can provide and probably backup will tag along with those features ( If customer wants those feature they can only get single license SKU and backup comes with it - Would they than spend more just so that they get their backup in amazon? - I doubt it)
• Every end user who is using Office 365 for their email, SharePoint, Onedrive -- they will automatically know that Microsoft provides backup because that tab just gets added into admin center ( Microsoft doesn't need to advertise to their millions of customers -- they see it as they go on to manage these application right in front of their eyes)
• Microsoft will publish new APIs for other vendors ( all vendors will probably have to spend some development/integration effort to comply with new APIs).
• Microsoft understands the data structures and controls the APIs to access the data for backup and restore. As such, they should be able to guarantee 100% fidelity when it comes to restoring data. Microsoft control over backup APIs is not necessarily a good thing.
• Unlike third-party solutions, Microsoft can change the way that their applications work to make their backup and restore technology work better.

There are some positives for $DSE as well: like The Azure subscription could become a potential single point of failure for backup operations.

Above are the fundamental points, If I look at human behavior points, I doubt any fund manager will come gun blazing in the market with their buy orders after this news- if the conviction is high then most probably they will hold it but won't buy more unless $DSE see this thing in couple of years. Risk vs Reward doesn't stack up for me and hence I sold first thing in the morning. Now I will see from the sideline how this thing plays out and then make a call.. If Microsoft syntex product is total flop then I know what to do. - I will probably have to buy at little higher price but that's the path I have taken currently.

I sold my holdings yesterday. Thanks to @Valueinvestor0909 for the initial post on both here and Twitter that first alerted to me to the new Microsoft product.

From my perspective, it was a black swan event. Never did I fully contemplate that Microsoft would create its own service to backup its own products. Due to the heightened risk, for a company which I consider to be a low-moat business, and still trading at a decent valuation (6x ARR, slight cashflow positive) - I rather sit and watch from the sidelines at this stage. It could very well be a nothing-burger, in which case I’ll have the option of buying back in at a likely premium to today’s price.

Of the advantages Charif highlighted that Dropsuite has over Microsoft’s new product, the cheaper price and being more fully featured are the two that are most compelling. The MSP focus and SMB targeted customer base may be DSE’s biggest protection.

Again @Valueinvestor0909 stated a lot of my concerns. My key concern is once Microsoft 365 Backup is launched, they’ll slowly iterate over time - in terms of both product and marketing - until it becomes a ugly scrap for everyone competing in the space.

Microsoft can do things other competing solutions cannot. They’ve already demoed a couple during the announcement. One, it’s integrated as part of the Microsoft 365 admin dashboard. There’s no setup or configuration required, and is enabled by the click of a few buttons. That’s distribution nobody can compete with. Two, data is backed up pretty much immediately after it’s turned on. There’s no syncing and waiting a day or so for the initial run, even on petabytes of data. That’s because Microsoft controls the underlying infrastructure of the products and can do a bunch of hardware and software wizardry underneath the surface.

I’m also not sold that keeping backups on another cloud vendor (AWS) will be a strong differentiator for Dropsuite going forward. Azure is monstrously big. Just in Australia it’ll have 3 regions by 2024, each region has 3 availability zones, each availability zone is at least a few data centres. They’ll be able to design a very robust and segmented backup solution with the marketing and PR nous to reinforce it. A global wide Azure outage would be catastrophic event, where most business will be scrambling around on why their websites/CRM/ERP/etc are down rather than worrying about restoring email backups.

I’ll be watching with interest to see how this all works out.