Last week was a dark one for cloud storage vendors. The week began with confirmation that Iron Mountain had closed its file and archiving cloud services and ended with news that startup Cirtas laid off most of its staff.
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So is this a sign that cloud storage isn’t catching on, or the beginning of consolidation in the market? It’s certainly not yet a sign of doom for cloud storage. Every major storage vendor has public and/or private cloud products and services, and they’re pushing them hard. Iron Mountain and EMC – which closed Atmos Online last year – still have other cloud offerings.
And whenever several startups tackle a market, at least a few will fail. Cirtas is among a bunch of companies that began offering gateways to create hybrid storage clouds within the last year or so.
The CEOs of two of the cloud gateway vendors, Nasuni and StorSimple, say it was a coincidence that Iron Mountain and Cirtas failed in the same week. Nasuni’s Andres Rodriguez and StorSimple’s Ursheet Parikh agree that both failed for different reasons – Iron Mountain was too expensive at 65 cents a gigabyte and Cirtas’ SAN cloud gateway lacked enterprise SAN features.
People in the industry say some of the investors who sunk $22.5 million into Cirtas in January were unhappy with the lack of success of the product, and Cirtas is looking to either revamp its product or sell off its technology.
Rodriguez and Parikh said Iron Mountain was fighting a losing battle against larger service providers Amazon, Google, Microsoft and AT&T. Rodriguez predicted that other smaller cloud storage providers will also falter.
“No one buys technology, and the cloud is no different,” Rodriguez said. “To turn it into a real business, you better have something that works and offers a compelling value proposition. Iron Mountain learned the hard way that offering the back-end storage is a game for giants. It is simply not possible to compete with the economies of Amazon, Microsoft or Google. I believe it is just a matter of time before other service providers follow [Iron Mountain].”
Parikh said Iron Mountain had trouble adapting its core business model to the cloud.
“Iron Mountain knows how to manage tapes, but doesn’t know how to manage services,” StorSimple’s Parikh said. “Even at 65 cents a gig, it was losing money.”
As for Cirtas, Parikh said its Bluejet Cloud Storage Contoller lacked redundancy needed for a SAN product.
“You cannot deliver block storage without dual controllers,” he said. “If it were a file product like Riverbed [Whitewater], you can use it for backup. High availability and reliability has to be table stakes for block storage. No one gets fired for buying expensive storage. When a storage guy gets fired, it’s for losing data.”
Rodriguez said Cirtas took the wrong approach by trying to sell iSCI SAN storage in the cloud. “Blocks-to-the cloud is not technically sound,” he said. “From a business perspective, arrays are the hardest possible place to enter a data center with new technology. People are religious about their arrays. I don’t know exactly what happened, but I know [Cirtas] was having problems in the field.”
The Nasuni Filer is a virtual NAS appliance that turns commodity hardware into a NAS that moves data off to the cloud. The StorSimple Appliance is used mostly to move data from Windows file servers, Microsoft Exchange and SharePoint and VMware to the cloud. “We provide the appliance, and the customer buys the cloud directly with a separate contract with Amazon, Microsoft or A&&T,” Parikh said. “We reduce the cloud provider bill, and that more than pays for our appliance.”
Rodriguez said cloud storage gateways need to be reliable and low cost to succeed.
“This is a business not unlike the harddrive business,” he said. “It’s a total commodity play. It is about quality at a low cost. Nasuni repackages that raw, commodity into something businesses can run on.