SilverBack Pricing Play Shakes Up MSP Platform Arena

Just when solution providers looking for MSP platforms thought prices couldn't get any lower, SilverBack Technologies drops the big one.

SilverBack, widely considered the 800-pound gorilla of the platform makers, recently slashed its entry-level price to $2,999 from $76,500. The bombshell effectively reshapes the competitive landscape in the highly charged MSP platform arena. The price cut comes just weeks after perennial low-price rival LPI Level Platforms made a market-share grab by inking an exclusive deal with distribution giant Ingram Micro, and follows SilverBack's own wider grab at market share by way of a similar deal with Bell Microproducts.

In a year that saw a price war break out in the trenches between rivals N-Able Technologies—long considered one of the high-priced players—LPI and others, many are wondering if there are more pricing salvos to come in the how-low-can-you-go game.

SilverBack's stance during the MSP price war was to remain on the sidelines, refuse to lower its price, boast it was raising its price, and repeatedly thumb its nose at its rivals' discounting. SilverBack CEO Dan Phillips defiantly told N-able, LPI, Kaseya and Cittio that they "could offer their products for free, and it would still cost more to deliver managed services with their products than it does with SilverBack."

Now, a new hosted Software-as-a-Service (SaaS) option from SilverBack offers MSPs the vendor's full-blown tools in a 35-device license SKU for $2,999, said Peter Klanian, vice president of sales at SilverBack, Billerica, Mass. This price matches what LPI charges for its Small Business Site SKU, which delivers remote monitoring and management to 10 sites consisting of no more than 10 monitored devices each.

With the SaaS offering, SilverBack departs from its single, set price of $76,500 for its appliance-based MSP platform, and introduces seven new pricing tiers starting at the $2,999 mark and ending with a comprehensive new BusinessBuilder Plus offering that delivers the platforms and a consulting package for $99,500 (see comparative pricing chart). On top of its new price scheme, SilverBack will give MSPs dollar-for-dollar credit for the money they spent on any rival MSP platform when they purchase a SilverBack product, Klanian said.

Like many MSPs now running managed services platforms from SilverBack rivals, Larry Schwartz, president of Midnight Blue Technology Services, a two-year-old solution provider in Pittsburgh that is ramping up an MSP business using N-able's Momentum System, has witnessed SilverBack's technology in action, and gives the product high marks. "SilverBack is a great product. It's a Cadillac," he said.

LPI partner David Dadian, CEO of Powersolution.com, a HoHoKus, N.J., MSP that has used N-able and dabbled with Kaseya's product, said that if a brief courtship with SilverBack earlier this year had bloomed into a full-blown commitment, Powersolution.com already would have a far more profitable MSP business. "We'd be further ahead if we'd just paid the money for SilverBack," he said.

Dale Holmgren, president of Granite Pointe Partners, a solution provider and MSP in Plymouth, Minn., had prepared himself to fork over $76,500 to SilverBack to incorporate the product's superior intrusion-detection and vulnerability scanning tools into his MSP business—one based on the Kaseya platform. Wanting to preserve his investment in Kaseya, Holmgren planned to layer SilverBack's strength in security atop Kaseya's strengths in IT automation.

Holmgren was the first MSP told by SilverBack about the price drop. That timing saved Holmgren more than $40,000, he said.

NEXT: SilverBack targets competitors' customers

TAKING AIM AT RIVALS

SilverBack—whose MSP partners are dubbed Gorillas after the dominant, troop-leading SilverBack gorillas of Africa—maintains that it hasn't really lowered its prices. "It isn't that we have lowered our price, we've just lowered the barrier of entry," said Jonathan Wolf, vice president of product marketing at SilverBack.

The SaaS offering was necessary in part to better accommodate the relationship with Bell Micro, San Jose, Calif., Wolf said. "A hosted offering was done to achieve both objectives. To help seal the deal with Bell Micro to easily deploy their partners, and also as a way to roll out the lower-cost QuickLaunch packages," said Wolf.

But the SilverBack trade-in program is purely aggressive behavior designed to turn MSPs running rival products into Gorillas, Klanian said. "We want to take the investment you already have sunk into competing product licenses and give you a better product," he said.

MSPs will spend more than they did on a rival product if they trade it in to SilverBack under the new program, Klanian said. For example, if an MSP spent an initial $1,500 to purchase a rival MSP platform, SilverBack will credit that $1,500 toward the purchase of either its new entry-level $2,999 offering, or a more expensive SilverBack offering, he said. Likewise, $10,000 initially spent on a rival product will be credited to any of SilverBack's newly priced SKUs costing more than $20,000, he said.

Kaseya used to have a trade-in program designed to unseat rival vendors, but it's no longer official, said Bill Falk, vice president of sales at Kaseya, San Francisco. Now, instead of introducing a trade-in offer to every MSP running a rival product, Kaseya salespeople just make the offer to prospects deemed as strategically important, he said.

"We don't spend a lot of time trying to take business away from our competitors. In our mind, that's misspent marketing resources. There's a great big market out there to go after," Falk said.

Kaseya's weaknesses in intrusion detection and vulnerability scanning that prompted Holmgren to begin saving his money for SilverBack will be strengthened in a week or so, said Falk, who declined to offer details of the upgrade pending the official announcement. However, Barry Monies, president and CEO of Computronix, a Kaseya partner in Stamford, Conn., knows all about the upcoming improvements to Kaseya's security features. Kaseya's roots are in IT network automation, and the vendor only began to seriously take on rival MSP platform vendors in March when it shook the market by introducing expanded device monitoring. The steps being taken to address security mean Kaseya "is only going to get better," Monies said.

But Holmgren—who said he was surprised that as a Kaseya partner he was not told about the security improvements in the pipeline, particularly since he was eyeing a rival product—probably will stick with SilverBack as a security tool, he said. SilverBack's lower pricing makes it easier to run the product side-by-side with Kaseya.

NEXT: Comparing the platforms

MSP PLATFORM SHOPPING

The 120-device license that SilverBack's appliance-based $21,000 ServiceBuilder SKU provides should be adequate for most MSPs catering to SMB customers, Wolf said.

Each vendor that CRN obtained price information from recognized there is always some wiggle room for wheeling and dealing the details. But when roughly compared to LPI, N-able, Kaseya and even Cittio, a San Francisco rival whose Slingshot Kit WatchTower product starts for about $10 per node per month for a 100-node license, SilverBack's new pricing is remarkably competitive.

MSPs can take the 120-device licenses delivered by the ServiceBuilder SKU and spread them out across as many separate customer sites as they wish, Wolf said. Off the shelf, the 120-device licenses that ship with the ServiceBuilder SKU are divided into separate PC, server, and network device licenses, but SilverBack will accommodate MSPs that want the ratios of these different licenses customized to their needs, he said.

License arrangements from N-able and LPI restrict how many individual customer sites an MSP can deliver services to. Factor in SilverBack's trade-in program, and proof of purchase for a 100-seat Kaseya license puts an MSP into SilverBack's ServiceBuilder for about half-price.

All of SilverBack's new SaaS offerings deliver the complete toolset of the vendor's traditional appliance-based product, including network monitoring, device management, full patch distribution and reporting, and security, Wolf said.

It's not just about price, said Powersolution.com's Dadian, who spent thousands of dollars on a faulty N-able product that now collects dust on a shelf, then test-drove Kaseya and SilverBack, and now has a special development deal with LPI.

What makes SilverBack's proposition so attractive, Dadian said, is the training and MSP methodology consultation delivered with its core technology. When he looked closely at SilverBack during the summer, what Dadian noticed was that "[SilverBack] gets you up and running, they change your methodology, and that seemed to be what justified much of the cost," he said.

SilverBack's consulting and training methodology is still in place with the new low-cost structure, Klanian said. "We have a technical and operations track, and a sales and marketing track that partners attend," he said. "It's three days of administrative training, and two days of operations training, and when we leave, partners have a complete run book to work from."

Comparisons can be made between SilverBack and N-able in the way each vendor emphasizes not just products, but also the importance of transforming a solution provider's traditional break-and-fix culture into that of an MSP, Klanian said.

But that's where the comparisons stop, said Gavin Garbutt, CEO of N-able, Ottawa. Going after rival vendors' MSPs with a trade-in program is not a game N-able intends to play anytime soon, he said. The MSP industry is still in its infancy, he said, echoing the sentiments of Kaseya's Falk, and saying there's too much untapped opportunity out there to bother poaching established MSPs.

Besides, N-able didn't just recently throw a rope down to solution providers looking for a lower-cost point of entry like SilverBack has just done—N-able has had lower-cost offerings like its MSP Startup Program and N-able OnDemand for more than a year, Garbutt said.

The hidden costs associated with using products from LPI, N-able, Kaseya and other rivals is what has always made SilverBack more profitable for MSP, Klanian said.

For example, SilverBack delivers full patch distribution out of the box—not the case with LPI, Klanian said. LPI may say it offers free patch management and patch distribution, but the "$3,000 to $5,000 cost" of buying a server to house Windows Server Update Services and install it at a customer's site makes using LPI far more expensive than LPI wants to let on, he said. "You have to look at the whole value of what you are getting."

Peter Sandiford, CEO of LPI, Ottawa, said of SilverBack's charge: "There is absolutely no need for a dedicated box of any kind even for our base product, let alone patch management.

"We leverage our agentless technology so that not only is it free but you don't even need to install anything at all on the end customer site," Sandiford said. "Why would anyone pay anything for patch management today?"

NEXT: Solution providers mull platform changes

TIME TO SWITCH PLATFORMS?

Experience has taught Midnight Blue's Schwartz that SilverBack is a superior MSP platform, but he has no intention of jumping off N-able and trading in for SilverBack, he said.

Before starting his own company, Schwartz worked for Red Square Systems, an enterprise-level MSP owned by Ian James. Red Square is a SilverBack partner, and there Schwartz gained an understanding of how feature-rich and fail-safe SilverBack's platform can be.

"But what it comes down to for us is that SilverBack has features our clients don't care about seeing. They just want to know that if something goes wrong, we'll respond," Schwartz said. "Besides, we are not selling N-able to the client. We are selling our managed services package."

On the other hand, Jim Millican, president of Ashton Technology Solutions, a solution provider in Cleveland, is seriously considering a move to SilverBack now.

Millican is counting the days until his contract with LPI expires in February 2007, he said. In early 2005, before LPI raised it entry-level price to about $2,500 at the beginning of this year, Millican began running LPI for what was then the vendor's $60-per-month-based price. After the first year as a month-to-month customer, LPI offered Millican a discount if he committed to a yearlong contract, which Millican agreed to. But LPI's product has given him and his engineers so much grief that Millican has refused to add a single MSP customer in fear of losing them for good.

"Now we are just plain, flat-out skeptical of everyone," said Millican of the MSP platform vendor market.

Millican, who was introduced to SilverBack while attending a recent conference for partners of professional services automation vendor ConnectWise in Tampa, Fla., plans to give SilverBack a 30-day test drive in an closed network environment.

His experience with LPI fortunately cost him relatively little money, but he doubts that he will be as lucky next time around. "LPI was a bearable cost. Our next step will be the unbearable cost. So I have to be right this time," said Millican.

NEXT: MSP platform pricing: a closer look

MSP PLATFORM PRICE LIST

SilverBack Technologies

Hosted Platforms:
QuickLaunch: 35 device licenses, $2,999
ServiceLaunch: 80 licenses, $9,800
ServiceLaunch Plus: 120 licenses, $14,770

Appliance-Based Platforms:
ServiceBuilder Annual: 120 licenses, $21,000 per year
ServiceBuilder: 120 licenses, $42,500 perpetual
BusinessBuilder: 250 licenses, $76,500 perpetual
BusinessBuilder Plus: 450 licenses, $99,500 perpetual

N-able Technologies

Hosted Platforms:
Momentum System: $70 per customer site per month, less than 5 customers
Momentum System: $60 per customer per month, more than 5 customers

Server-Based Platforms:
N-able Velocity: Software: $6,000 for five customer licenses. Dedicated server (such as Hewlett-Packard DL360G4), add approx. $4,000. Minimum purchase 15 licenses, $1,500 per license.

LPI Level Platforms

New Partner Pricing:
Small Business SKU: Networks up to 10 devices, $2,999 for 10 site licenses
Medium Business SKU: Networks up to 254 devices, $2,499 for three site licenses
Medium Business SKU: Networks up to 254 devices, $4,999 for 10 site licenses
Total Solution: 10 Small Business SKU licenses and 10 Medium Business SKU licenses, $6,999

Additional licenses (existing customers):
Small Business SKU: Up to 24 licenses: $40 each; 100-plus: $15 each
Medium Business SKU: Up to 24 licenses: $60 each; 100-plus: $25 each

Kaseya

Managed Services Edition:
100 Clients: $12,000; With backup and disaster recovery, add $4,275
250 Clients: $25,500; With backup and disaster recovery, add $9,800
500 Clients: $45,000; With backup and disaster recovery, add $16,625
1,000 Clients: $60,000; With backup and disaster recovery, add $28,500
2,500 Clients: $120,000; With backup and disaster recovery, add $59,375
500 Clients: $200,000; With backup and disaster recovery, add $95,000