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Cloud Computing

Faith and hope, not clarity, mark cloud storage future

Let’s play a game. Pick one of your favourite tech companies. Now imagine it’s vanished. How much new hurt is in your life?

The vanishing game is one I play when trying to decide how important a company or service really is, compared to how important it thinks itself to be, or what sort of media profile it gets. It’s fun and by no means entirely predictable by company size - for me, at least, if Apple got abducted by aliens I’d barely notice, and for most of the world that brand is no more irreplaceable than Coca-Cola. Google’s going, however, would leave a ragged, bleeding wound - my workflow is wrapped around a lot of Mountain View’s services.

Of course, Google isn’t going anywhere - let alone Apple, buttressed about with enough cash to buy a new planet when this one’s ashtrays get full. Scamper down the scale a bit and the game gets more serious.

Cloud storage services are particularly vulnerable. Full-fat cloud services are sticky; moving substantial amounts of corporate technology between AWS, Google Cloud and Azure isn’t something to be done on a whim. Pure storage is different: data is more liquid than code, and while switching or mixing service providers isn’t quite drag and drop, it’s not departmental project level either.

Which puts cloud storage providers in a dangerous place. To some extent, every company relies on confidence to keep the money coming in: if you don’t think they’ll be there tomorrow, you won’t buy their services or products today. But certain classes of company - most obviously financial - have a dangerous mix of risk and reward. You risk losing all your money if your bank gets broken, but what rewards you get if it doesn’t are minimal and can just as easily be realised elsewhere. Once a rumour starts that a bank’s in trouble, a run on the market can become fatal in days.

Cloud storage companies are in the same position. If you don’t think your provider is going to be around, it’s very simple to move your data out and put it somewhere else - certainly much simpler than waking up one morning to find it gone. If enough people do it, then the perception of trouble becomes the reality.

What makes this all the more fun is that cloud storage is not an exceptionally profitable concern to start with. Quite the opposite: Iron Mountain got out of the business, while Nirvanix did the vanishing trick for real when its investors got cold feet. Newly-IPO’d Box will make no profits “for the foreseeable future”, having burned through investor cash for nearly 10 years, while looking-at-IPO Dropbox has collected more a billion dollars in investment and is no nearer black ink. They’ve both got lots of customers, enterprise and private, and provide good services, and both have growing revenues, but you have to believe in them really hard if they’re to exist at all. A bishop, sadly surveying his elderly congregation, remarked that the Church of England was one flu epidemic away from oblivion; a few good rumours could do the same for the religion of cloud storage

It gets even more interesting - if by interesting you mean inexplicable - when you consider that Dropbox, for example, is a major customer of AWS. Although Amazon has never broken out AWS’ numbers during revenue calls (it’s promising to do so for the first time later this year), some estimates say it is probably extremely profitable in its own right. Amazon is certainly behaving like a company with the headroom to compete on price; it’s also not shy about competing with its own customers. Hence Amazon WorkDocs, a managed enterprise document and storage offering that’s parked its tanks firmly in Dropbox’s flowerbeds. If there is money in this game, Amazon is making it: it’s not a company with much of a track record of letting such a situation change.

Even by the standards of Silicon Valley, the whole field is fuelled by four-star optimism and gleeful disregard of dull old reality. Cloud storage is a market with goliath competitors, questionable profitability and extreme volatility: it’s everything the whole cloud sector is, but more so.

If you’re the custodian of other people’s data and you’re minded to put it out on the wire, you really should play the vanishing game - before it does.

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Rupert Goodwins

Rupert Goodwins expected to be an engineer, but journalism happened. As an engineer, he worked in defence, for Sinclair Research and Amstrad, in startups and for himself. First appearing in print in 1982 and online in 1984,  he's written about all aspects of technology in business for most of the UK nationals and tech magazines, and was most recently editor of ZDNet UK. Tries to solve more problems... See More

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