Carbonite, Inc.

Carbonite, Inc.

Company type	Subsidiary
Traded as	Nasdaq: CARB
Founded	February 23, 2006 (2006-02-23)
Headquarters	Boston, Massachusetts , U.S.
Parent	OpenText

Carbonite, Inc. is a U.S.-based tech firm that focuses on providing cloud backup services for users of Windows and macOS. In 2019, it became part of the Canadian software corporation OpenText. Carbonite offers solutions to back up documents, emails, music, photos, and system settings in the cloud. It pioneered the concept of unlimited backup storage at a fixed subscription cost, setting a precedent that competitors later emulated.

The company’s offerings are designed to serve two main customer segments: individuals and small businesses through its Carbonite Home and Home Office editions, and larger enterprises via Carbonite Small Business, which is tailored for organizations managing three or more computers.

Carbonite has earned accolades such as "Best Windows Backup Tool" from Lifehacker, "Labs Winner" by PC Pro, and "Editor's Choice" awarded by NextAdvisor. These honors underscore its strong position in the online backup market, despite receiving some mixed feedback from various reviewers.

This overview underscores Carbonite’s leadership in cloud-based data protection, its impact on pricing strategies within the sector, and its role within OpenText’s worldwide operations.

Product details

Carbonite Online Backup installs client-side software that operates continuously in the background, automatically detecting new or modified files to back up using an incremental backup approach. Files are compressed and secured with 128-bit Blowfish encryption before being transmitted over a secure SSL connection to remote servers. The encrypted backups are stored on RAID 6-configured storage arrays within the company’s data centers. The efficiency of the backup process depends on internet connectivity quality and bandwidth.

The software primarily safeguards user-created content including documents, spreadsheets, photos, and music files. Videos and files exceeding 4 GB must be backed up manually unless users upgrade from the base plan. Carbonite’s policies allow for data disclosure to law enforcement when legally compelled, as the company controls encryption keys for most accounts. Windows users may choose to manage their own encryption keys during setup; however, this limits file retrieval exclusively to the original device unless the key is subsequently handed over to Carbonite.

When Carbonite retains control of the encryption key, users can retrieve their files from any device through remote download. Without company-managed keys, file access remains confined to the backed-up machine. The service preserves multiple versions of files—maintaining three recent iterations plus extended historical backups spanning weeks or months—but deletes files removed by users after 30 days or upon subscription cancellation. Phone support is available for assistance with ransomware recovery. User agreements include arbitration provisions and limit Carbonite’s liability while requiring users to indemnify the company against misuse.

On Windows platforms, Carbonite backs up all files located within Documents and Settings except temporary files, logs, and video files; users can also select additional folders on local FAT32 or NTFS drives for backup. The HomePlus and HomePremium tiers extend support to external drives as well. Integration with Windows Explorer provides visual cues indicating backed-up files and allows easy file management through context menu options.

For ransomware incidents, Carbonite offers recovery support via customer service. On Intel-based Macs running OS X versions 10.4 or 10.5, the client integrates into System Preferences and supports native Mac file systems excluding FAT.

A remote access function enables users to download individual files from any internet-connected computer using a web browser, enhancing accessibility for users operating across multiple locations worldwide.

Company profile

Carbonite was established in 2005 by CEO David Friend and CTO Jeff Flowers, marking their fifth collaborative enterprise following ventures such as Computer Pictures, Pilot Software, FaxNet, and Sonexis. Friend brings prior executive experience from ARP Instruments, a notable manufacturer of electronic music synthesizers in the 1970s.

Since its debut in 2006, Carbonite has secured over 100 billion files through backup services and facilitated the restoration of more than 7 billion files for its users. The company broadened its user base in 2009 by launching a Macintosh version compatible with Intel-based Macs operating on OS versions 10.4 or 10.5.

As part of its expansion efforts, Carbonite acquired Mozy from Dell Technologies in 2017 for $145.8 million, thereby strengthening its cloud backup solution offerings. In 2019, it further diversified by purchasing Webroot for $618.5 million, integrating advanced multi-vector cybersecurity protection and threat intelligence capabilities into its portfolio.

On November 11, 2019, OpenText Corporation revealed a definitive agreement to acquire Carbonite at a cash price of $23.00 per share, valuing the deal at roughly $1.42 billion including debt and equity. OpenText intended to finalize the tender offer within ten business days and anticipated closing the acquisition within ninety days, aiming to enhance its market position in data protection and cybersecurity through this strategic move.

History

Carbonite’s initial product launch occurred at Staples in 2006, primarily targeting photo backup services accompanied by a complimentary six-month subscription bundled with camera purchases. That same year, it partnered with Microsoft to include its service with Microsoft Money 2007, renewing this collaboration for the following edition in 2008.

In 2007, AlwaysOn recognized the company as a ‘Top Private Company.’ That year also saw partnerships with Ipswitch, Inc., enabling service offerings to FTP client users, and with OLBEX to supply services to U.S. cable providers. By 2008, Carbonite provided foundational technology for Sonic Solutions’ digital media storage and TDS Telecom’s online backup solutions while collaborating with LaCie to deliver online backup products. Additionally, it expanded North American distribution through an agreement with Lifeboat Distribution.

Breaking new ground in 2008, Carbonite partnered with Packard Bell to offer free four-month subscriptions to European customers purchasing desktops and notebooks—marking the first alliance between an independent online backup provider and a major PC manufacturer. This initiative extended through pre-installations on PCs from Lenovo and Acer, broadening its presence into Australia, New Zealand, and other international markets.

In 2009, Carbonite was involved in litigation concerning backup failures impacting more than 7,500 customers; the lawsuit targeted hardware supplier Promise Technology.

On June 6, 2011, Carbonite acquired Phanfare. Rather than honoring Phanfare’s lifetime memberships directly, Carbonite issued $299 credits usable for three years on Phanfare services. Shortly thereafter, Phanfare’s founder and CEO Andrew Erlichson communicated to lifetime members that any refunds would be paid from Phanfare’s remaining assets rather than by Carbonite.

Funding

In 2006, the company obtained $2.5 million through Series A funding from investors including 3i, Keiretsu Forum, and CommonAngels. The subsequent year, it secured $15 million in a Series B round spearheaded by Menlo Ventures. In 2008, an additional $5 million was raised via Series B-2 financing, along with approximately $20 million in a Series C round led by Performance Equity based in Stamford, Connecticut. By 2010, total capital raised had reached $67 million following the completion of a mezzanine financing round. The firm went public in August 2011, generating $62.5 million through its initial public offering.

On February 4, 2013, the company disclosed a net loss of $18.9 million for the year 2012, showing improvement from a $23.5 million deficit in 2011. Since its founding in 2005, it has accrued over $120 million in investment losses across both private and public funding sources. According to SEC disclosures, ongoing GAAP operating losses are anticipated to continue for the foreseeable future.

Amazon review controversy

In early 2009, Carbonite encountered criticism when it was revealed that employees, including members of upper management, had posted positive testimonial-style reviews on Amazon beginning in 2006. The CEO was reportedly aware of these deceptive reviews as early as September 2008 but did not take corrective measures until the issue was exposed by the New York Times in January 2009.

Misleading advertising controversy

On August 1, 2012, the Advertising Standards Authority (ASA) determined that Carbonite had misled consumers by promoting its online backup service as unlimited. Due to bandwidth constraints—upload speeds limited to 2 Mbit/s for the initial 200 GB and reduced to only 100 kbit/s thereafter—the service was not genuinely unlimited, rendering the advertisement "likely to mislead consumers." Additionally, Carbonite violated rule 1.7 of the CAP Code by failing to respond to the ASA’s inquiries.

In response to this issue, Carbonite removed bandwidth throttling for all customers in 2014.

Releases

• Carbonite Photo Backup version 1.4 (late 2005)
• Carbonite Unlimited Backup version 2.0 (May 2006)
• Version 2.1 (February 2007) introduced support for Windows Vista
• Version 2.3 (June 2007) implemented block-level incremental backups
• Online Backup Service launched in French and German markets (2007)
• Version 3.0 (August 2007) enhanced ease of use for online backup
• Version 3.5 (January 2008) added improved user controls and retention of up to three months’ file versions
• Expansion into Dutch, Portuguese, Spanish, and Japanese languages (2008)
• Version 3.6 (June 2008) optimized backup speed for large files and overall performance
• Version 3.7 (March 2009) incorporated enhancements requested by users
• Added remote file access capability (2009)
• Released Carbonite Online Backup for Intel-based Macs running OS X versions 10.4 or 10.5 (March 2009)
• Version 4.0 released (September 2010)
• Launched iPad application alongside updates to iPhone and BlackBerry apps
• Introduced Carbonite Small Business solution targeting small and medium-sized businesses (2011)

See also

• Comparison of online backup services
• List of backup software (includes managed backup providers)

External links

• Boston Business Journal: Carbonite announces $100 million initial public offering