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SolarWinds MSP Spin-Out vs. Datto IPO: Thompson, Pagliuca Offer Perspectives

How does SolarWinds MSP compete against Datto? The answer to that question is familiar to established MSPs (managed IT services providers). But the discussion is a relatively new one on Wall Street financial analysts and investors -- especially amid Datto's recent IPO ($MSP) and SolarWinds' ($SWI) plan to spin-off the SolarWinds MSP business.

John Pagliuca, president, SolarWinds MSP
John Pagliuca, president, SolarWinds MSP

With those financial developments in mind, Wall Street analysts asked for more context about the competition during SolarWinds' earnings call on October 27, 2020.

SolarWinds MSP President John Pagliuca offered this perspective to analysts on the call:

"We're actually glad to see Datto have the successful IPO. We respect the Datto team in the business that they have there. They have a good business, especially where they're focused and they're primarily focused in the backup and disaster recovery space. So, they've done a good job, I believe educating the broader market, doing a good job kind of telling the story that our MSPs carry on every day."

In many cases, MSPs sell SolarWinds MSP's RMM (remote monitoring and management) software side-by-side with Datto's backup and disaster recovery (BDR) solutions, Pagliuca added.

Side note: Pagliuca will shift from president to CEO of SolarWinds MSP, assuming that spin-out moves forward as planned.

SolarWinds MSP vs. Datto: Kevin Thompson's Perspective

Departing SolarWinds CEO Kevin Thompson

SolarWinds CEO Kevin Thompson added:

"We are really strong when it comes to remote monitoring and management automation and helping our MSP manage their customer environment. And we believe we've got the strongest rolling platform and product portfolio there. We have great security technology. We have remote monitoring and management technology. Obviously as a business, we're really good at monitoring and managing performance of environment.

The Datto really started as a backup company who bought MSP professional services automation company. And so that's where their strength is. We're strong in different parts of the MSP market. So not that we don't compete, but we are not direct head to head with them on a daily basis, because our strengths are a little bit different. We do have backup and we have a really good cloud to cloud backup solution, which is growing very nicely for us. But they're more hardware-based. They are more environments that are not as cloudy as environments we're in. So, while we compete in the market, we are really different in two businesses today."

The SolarWinds MSP security effort, by the way, includes a close working relationship with endpoint protection software provider SentinelOne.

Side Note: Kevin Thompson has disclosed plans to step down as CEO of SolarWinds. The board has hired an executive search firm to find candidates to potentially succeed Thompson, he disclosed during the October 27, 2020, earnings call.

MSP Technology Providers: M&A Triggers Rivalries

Still, ChannelE2E expects the Datto vs. SolarWinds MSP competition to intensify -- since both companies continue to invest in their respective BDR, RMM and PSA (professional services automation) platforms. Plus, both companies remain in acquisition mode.

As Thompson hinted, the spark for SolarWinds vs. Datto competition surfaced in 2017 when private equity firm Vista Equity Partners merged Datto with Autotask, blending data protection with PSA and RMM software.

Fast forward to present day. Amid the coronavirus pandemic, Datto has increasingly emphasized its cloud-to-cloud SaaS backup service. SolarWinds MSP has made similar moves with its own BDR services.

The potential reasons: Protecting Office 365 and other SaaS applications is now a mission-critical SMB requirement. Plus, selling on-premises Datto backup hardware into small businesses may face some headwinds as SMB employees increasingly work from home.

MSP Technology Providers: RMM, PSA, BDR and More

Meanwhile, the line between data protection, RMM and PSA software continues to blur. SolarWinds MSP, Datto, ConnectWise and Kaseya each offer solutions in those key areas -- though each company has its own strengths and weaknesses.

Also of note: NinjaRMM recently unveiled a home-grown BDR and data protection service within its RMM platform, and numerous software companies are blurring the lines between data protection and security services -- especially to mitigate ransomware attacks.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.