Backup Vendors Exit Hardware Business, Opening Door for ExaGrid

Many backup software vendors are abandoning hardware sales. ExaGrid capitalizes on this shift as the largest independent backup storage vendor serving enterprises.

The backup storage market is going through a fundamental shift. Many major backup software vendors no longer want to sell hardware.

Veeam doesn't push specific storage vendors. Rubrik allows customers to buy whatever archive storage they want. Commvault will recommend that customers purchase what they need, not just its HyperScale X appliances. And will Cohesity, a software company, continue to support NetBackup appliances after acquiring Veritas?

ExaGrid is benefiting from this change. The company is now the largest independent backup storage vendor behind the seven storage giants: Dell, HPE, NetApp, Pure Storage, Hitachi, IBM, and Huawei.

Why Software Vendors Left Hardware

Backup software companies want subscription revenue and annual recurring revenue (ARR). Storage hardware gets purchased as capital equipment. Customers keep backup storage for six to nine years on average, far longer than the three-year refresh cycles software vendors prefer.

Hardware also requires infrastructure software vendors don't want to maintain. You need service depots around the world. You need people to replace failed drives. You need to manage supply chains and inventory.

Bill Andrews, ExaGrid's president, explained the shift during a presentation to analysts: "Software companies finally realized backup storage isn't their business. Dell and HPE can handle the hardware. They'll focus on software where they make better margins."

The numbers support this strategy. Rubrik reached $1.3 billion in revenue in ten years by focusing on software. Cohesity hit $1.6 billion. Compare that to the complexity of competing in hardware against Dell and HPE, which dominate 80% of backup storage sales.

ExaGrid's Market Position

ExaGrid operates in a market most storage giants consider too small to prioritize. The global backup storage market is $6.8 billion annually. That's material revenue for ExaGrid but rounds to noise for Dell or HPE when AI infrastructure generates billions in new orders.

This creates opportunity. ExaGrid has maintained double-digit growth and reports 19 consecutive cash-positive quarters. The company operates debt-free and hasn't raised money since 2013.

ExaGrid now has 4,821 active customers across 81 countries. The customer retention rate sits at 95.2%, and 99.1% of customers maintain active support contracts. The Net Promoter Score of +81 ranks above most enterprise storage vendors.

The company wins 70% of competitive evaluations. When ExaGrid loses, it's typically to incumbent vendors where the CIO refuses to switch brands, or because existing vendor relationships override technical evaluation.

The Product Differentiation

ExaGrid's architecture differs from both inline deduplication appliances and standard disk storage. The company uses a two-tier design, with a high-speed Landing Zone for fast backups and a separate Repository Tier for deduplicated long-term storage.

This matters because it solves a problem enterprises face daily: backup windows keep expanding as data grows. Traditional deduplication appliances slow down backups because they deduplicate data inline. Standard disk storage provides fast backups but requires more capacity for long-term retention.

ExaGrid's approach delivers fast backup windows and efficient storage without forcing customers to choose between them. The architecture also includes a non-network-facing tier that ransomware can't access through network protocols.

The company supports integration with all major backup applications: Veeam, Commvault, Veritas NetBackup, and Rubrik. In October 2025, ExaGrid announced support for Rubrik's archive tier.

Target Market and Competition

ExaGrid targets the upper mid-market to large enterprise segment with 50TB to hundreds of petabytes of backup data. This puts the company in competition with Dell EMC Data Domain and HPE StoreOnce for dedicated backup appliances, or Dell PowerStore and HPE Nimble for primary storage used for backups.

Dell and HPE still dominate overall. But ExaGrid's sales model gives it advantages. The company employs 38 inside sales representatives who cold-call target accounts, 90 field sales reps, and 58 field systems engineers. About 20% of new business comes from direct cold calling.

The rest comes through resellers and increasingly through global systems integrators. ExaGrid recently signed HCL Technologies and is in lab testing with several other large GSIs. These partnerships matter because GSIs often run managed services for clients and influence infrastructure decisions.

The Economics of Backup Storage

ExaGrid makes a strong economic argument against subscription and consumption-based pricing models for backup storage.

The company published a cost analysis showing that capital equipment expenditure becomes less expensive than subscription after 2.5 years. Since most customers run backup storage for six years or more, subscription pricing costs roughly double over the equipment's useful life.

For 300TB of backup storage over six years:

• Capital purchase: $76,800

• Subscription: $149,760

• Consumption-based: $194,400

• Public cloud: $237,600

These numbers explain why customers typically choose a subscription for backup software but a capital purchase or leasing for backup storage.

What's Next

ExaGrid plans to ship all-SSD appliances in December 2025. The company expects these solutions to appeal to three customer segments: organizations that require the fastest possible restore times, customers with high electricity costs, and companies with policies that mandate all-flash infrastructure.

ExaGrid will also ship Cohesity integration in the first half of 2026. This matters because Cohesity acquired Veritas, and NetBackup represents a significant installed base of potential customers.

The company's recent feature releases focus on managed service providers. New capabilities let MSPs track storage consumption by customer and recover from ransomware attacks on a per-customer basis without affecting other customers in multi-tenant systems.

For a company operating in a market segment most vendors are abandoning, ExaGrid has positioned itself well. The backup storage market isn't going away, and enterprises will continue backing up hundreds of terabytes of data. ExaGrid plans to be there when they need an alternative to Dell and HPE.