We had launched blogVault, a wordpress backup service, about a month back. A week later, Automattic, the company behind Wordpress, launches Vaultpress, to massive coverage. This service does pretty much what we do.
We were initially hoping to build some SEO/SEM traffic around Wordpress related topics, but now we are in a position where almost anybody who would want such a service would have heard of Vaultpress.
What are the ways in which we can tackle such a situation?
I think you should look at it as an opportunity. They are building a good market for you.
They build awareness on backing up WordPress.
Now, build a better product than them and own it. Or build a product that compliments theirs.
Look at the example of SourceGear.
They make a living of writing software to replace SourceSafe and its shortcomings. Microsoft created the market for them, they just used it.
Gorillas are slow animals you know; especially the 800 pounds ones 8-)
This is what you're going to do.
Not only should you beat them at their own game, go ahead and build a backup system for Movable-Type, Tyepad, Expression Engine.
Put great emphasis on your security and customer servicer. The latter especially. Automattic is a mid-sized business now, chances are you can dedicate more to customer service than they will.
I agree with the commenter that said this is an opportunity. Wordpress just validated your idea, go ahead and expand the model to other platforms as well. Thats something Automattic won't do.
Phew, that's a difficult one. Don't take the suggestions you get here as truth, think deeply about this yourself.
If the "gorilla" was Microsoft or another company that needs to price its products high, then I would say go for a lower-cost, alternative vendor strategy. But Automattic is very used to competing with inexpensive / free services, so I think this strategy would fail.
How strong are your emotions about BlogVault? Are you deeply invested in it, are you seeing many brilliant things you can do with this product, are you energized at the thought of what the final product / technology will look like -- or is it "just" another business opportunity for you, a way to a company and some money but not especially dear to your heart?
A service to backup Gmail/Google Services is needed. If Google ever failed, 90% of my digital life would be lost.
Sorry to hear, if you want to continue your business it looks like you have no other choice but pivot - find something you can differentiate yourself from your competition (better / faster / cheaper).
Look at the value proposition for your product. Can you add more value to customers than Automattic?
Look at your target market. Can you cater to a different market niche, or smaller niches that Automattic has overlooked.
Can you adapt your technology to a different industry?
And also, what do you really want to do? If this is it, be prepared to stick in there. Most industries can support more than one competitor. Think about how you can be faster, nimbler and add more value to your customers.
In addition to faramarz statement that you should also integrate backups for other plattforms, a migration to would also be a great feature to stand out.