Double-Take Software (NDAQ:DBTK) develops software that protects people's data from disasters. It uses off-site servers to back up data 24 hours a day, protecting businesses from an emergency loss of information. As of December 31, 2007, Double-Take has sold and licensed its products to over 15,000 users. Double-Take's services mesh well with the Windows operating system, adding to its appeal to businesses which use this OS - but in the long term, Double-Take's business model is at risk if Microsoft decided to embed better data-recovery services into its operating systems.
Double-Take's clients include major corporations like Morgan Stanley (MS) and 250 of the Fortune 500 as well as the Pentagon and other government organizations. The company makes 30% of its money from 2 companies, Dell and Sunbelt Software Distribution, who bundle Double-Take products with their products and sell the software directly.  18% of the Company's sales come from Dell, and 12% come from Sunbelt.  Double-Take reported over $23 million in revenue during 2007, and has 354 employees.
As of December 31, 2007 Double-Take had over 15,000 customers. Customers can use the software to simultaneously protect anywhere from two to several hundred servers. Double-Take has various notable customers including
Besides its many customers in the United States, Double-Take does much of its business abroad. The chart to the right shows the location of the Double-Take's revenues.
Double-Take saves its clients from data-loss by selling them software, and by helping customers use the software solutions. Its revenues come from Software, Maintenance, and Professional Fees described in the Segment Information section.
The graph to the right shows that Double-Take has become exponentially more profitable in the past few years as it has started to serve major institutional clients.
Double-Take received approximately 59% of its revenue from licensing its software in 2007, and 63% in 2006. A software license allows a Double-Take customer to use the product indefinitely. At a surface level, this business model may appear unsustainable, but as companies expand, buy new systems, and change their networking protocols, they may opt to buy new Double-Take Software. They also pay Double-Take to maintain and update already purchased software. Software license purchases tend to be seasonal, with many organizations making their information technology purchases in the second half of the year.
Selling software has fairly high margins. That is to say, expenses represent a very small part of the $5000 of revenue each unit provides. Cost of software revenue includes media, manual, distribution costs, as well as royalties to developers of software Double-Take uses in its programs. Also, Double-Take must pay its sales team, and incur other marketing expenses to actually promote its product. The company plans to hire a larger sales force to more aggressively promote its software.
Double-Take offers a wide variety of software products that include:
As the image above suggests, Double-Take is very reliant on its distributors to sell its products to the final consumer. If, for instance, Dell stopped producing as many computers, Double-Take would lose business because Dell pays Double-Take to use its software on its computers.
Once the company sells its software, it charges maintenance fees for updates and support. Usually, purchasing a software license entitles a company to a year of free support before Double-Take starts charging. Additionally, companies pay Double-Take for Professional Services which include software installation, creation of specialized emergency recovery plans, and training of company employees to use the software.
Maintenance fees comprised about 35% of Double-Take's revenue in 2007 and 32% in 2006. Professional Services generated 6% in 2007 and 5% in 2006.
DoubleTake's Maintenance and Professional Services are more costly to implement than their software sales, and include salary and training costs, travel expenses, and basic overhead. As Double-Take begins to send less software out, and sends more people out to fix its existing software, the company anticipates a decline in its profitability. 
The demand for business data continuity products is fairly inelastic. Data protection is not an expense that can be easily cut from a company once the company starts basing its entire operation on a digital mainframe. A survey of data continuity companies conducted by Continuity Central verifies this conclusion. 63% of respondents forecast that 2009 spending on continuity products will stay level or increase from 2008.
The managed security services market has been growing steadily as more and more companies realize how efficient computerization can be. Further efficiency can be found in the use of virtual mainframes, and multi-regional servers. The US managed security services market was valued at approximately $1.3 billion in 2007, an increase of 19.6 percent over 2006. The IDC predicts it to grow to $2.8 billion by 2012. Thus, Double-Take is operating in a growing market and stands to benefit from higher demand in the long run.
A larger market for an inelastic service will of course only benefit Double-Take insofar as it can maintain its market share and continue offering good products.
Due to events like the devastating Indonesian Tsunami, Hurricane Katrina, and September 11th, businesses have become more aware of terrorism and natural disasters. Unforeseeable and uncontrollable circumstances encourage businesses to back up their data in real time.  This trend will benefit Double-Take's business, which thrives on risk-aversion.
Because businesses could potentially cite data loss to cover illegal behavior, The Health Insurance Portability and Accountability Act of 1996 and the Sarbanes-Oxley Act of 2002 require data protection and recovery. The banking crisis has only increased the Government's mandate to oversee questionable business practices. Under the current laws, companies can no longer cite "server failure" to hide illicit action. Double-Take benefits from the current regulatory environment because its software helps major corporations comply with accounting regulations, because companies must continually back-up their servers to ensure transparency.
Especially with its recent expansion into Dubai , Double-Take stands to benefit from the world's modernization. As a growing number of African, Middle Eastern, and Asian businesses become fully digital, Double-Take will have the distribution networks to provide them with data recovery solutions.
Microsoft officially endorses Double-Take products because of their high compatibility with Windows. Microsoft also used to endorse Netscape, until it developed Internet Explorer to replace it. Microsoft has developed a low-level data protection product, but as of yet has not interfered with Double-Take's core business of providing continuous data protection for mid to large businesses. If this changes in the future, Double-Take would lose its entire competitive advantage. Other software companies would no longer have a pressing desire to bundle Double-Take software with their products if Windows offered a more reliable and integrated internal solution to continuous data recovery.
Furthermore, Double-Take software is specifically written to efficiently interface with Windows. If Windows were to lose its market share in the operating system market, then Double-Take's business would be hurt badly.
Microsoft (MSFT), while heavily endorsing Double-Take products, has released something called the 'Data Protection Manager' which competes with Double-Take's most simple data protection software. It aids basic data retrieval processes like tape-backup and local server back-up.  Symantec (SYMC) also offers data protection, but is more expensive and not as heavily endorsed by Windows and major corporate clients. EMC (EMC) and CA (CA) also offers data protection services. Finally, International Business Machines (IBM) has entered the data-emergency business with its purchase of Softek.
It is useful to note that none of Double-Take's major publicly traded competitors have data-recovery and protection as their core business, instead bundling the service with other products. Thus, Double-Take only competes in part with its competitors with the exception of the smaller private firm, Neverfail.
Despite the fact that Double-Take is dwarfed in market capitalization by EMC, Symantec (SYMC) , and CA (CA), it delivers its product competitively as evidenced by its high profitability shown in the graph below.
Backing up data does not require Double-Take or any other company. Smaller businesses could easily deploy the following options to protect their data cheaply.
First, Double-Take competes with more simplistic Tape Backup, which entails nightly or weekly backing up of data. Major products here include Symantec NetBackup and Backup Exec, IBM Tivoli Storage Manager, CA Brightstor Enterprise Backup, Legato Networker and CommVault Galaxy.
Secondly, when the primary drive does not completely fail, it is possible to take a Snapshot of a drive to make its recovery easier. Double Take offers continuous recovery, so no snap shots are necessary. Nonetheless, a combination of tape backups and snapshots works for most non-business users. Examples of Snapshot products include Microsoft Volume Shadow Copy Service, EMC TimeFinder and Snapview.
Third, companies can cluster, or use multiple interconnected servers to back-up data. This is very expensive and only works on-site. Double-Take offers products that make clustering more efficient, and improve its range. Some pure clustering products include Microsoft Cluster Service, Symantec Cluster Server, Steeleye LifeKeeper and Legato AutoStart.
Companies can also use complex disk mirroring and continuous data protection systems to protect their servers. Doubletake provides these services at a discount.