Nirvanix Shows the Dark Side of the Cloud

If you're investing in the cloud, you open yourself to risk in the event of a cloud disaster

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Cloud computing has been one of the hottest-growing segments of the computer industry. Storing data in the cloud or transitioning entire operations to cloud service providers has allowed many high-tech companies to grow fast without the capital and personnel needed to run their own data centers.

It’s unlikely that Pinterest, Snapchat or Facebook’s (FB) Instagram would be anywhere near as popular as they are today without Amazon (AMZN) Web Services or Google’s (GOOG) Cloud Platform. Besides providing a low cost, scalable point of entry for new services, cloud computing was hailed as a major money saver for companies looking to trim their IT costs during the recession.

However, the shuttering of Nirvanix shows once again that cloud risk is something that shouldn’t be ignored. In October, the established cloud firm served as a reminder about potential downsides of the cloud when it announced it was shutting down operations, giving customers just two weeks in which to migrate their data elsewhere.

Cloud Risks

Nirvanix had been in business since 2007, raised more than $70 million in venture capital, provided the infrastructure that powered IBM’s (IBM) own SmartCloud storage service and counted high-profile organizations like NASA (which used its cloud storage capacity to store thousands of high resolution digital photos from the Lunar Reconnaissance Orbiter) among its clients.

In short, so far as cloud storage is concerned, Nirvanix appeared to be about as safe as it gets. When it declared Chapter 11 and left customers scrambling for alternate storage options, it not only left partner IBM with egg on its face, it provided a very real reminder that even the most established cloud computing companies come with risks.

While two weeks is a very tight timeframe in which to transition data (especially large quantities of data), at least Nirvanix customers received some notice. When Megaupload was abruptly shut down in 2012 amid accusations of illegal file sharing, 150 million customers immediately lost access to their data. Yes, much of the data was infringing on copyright, but subsequent analysis determined that an estimated 10 million legal files were also affected.

Megaupload and Nirvanix illustrate the risk involved in cloud storage. On the operational side, Amazon Web Services has repeatedly illustrated the problems with using cloud services to power your business instead of running things from your own data center. AWS outages have been common in recent years, resulting in periodic downtime for high profile clients including Netflix (NFLX), Twitter’s (TWTR) Vine and Facebook’s Instagram. The outages haven’t been extensive, but the resolution has been largely out of the affected customers’s hands — when you rely on cloud services, that means giving up the control of having your own IT staff to get you back online.

Besides suddenly shutting down altogether (like Nirvanix), or suffering periodic outages (like AWS), cloud computing’s other leading risk is security.


Article printed from InvestorPlace Media, http://investorplace.com/2013/11/cloud-risk-nirvanix/.

©2014 InvestorPlace Media, LLC

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