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Cloud evaporates over Iron Mountain

Iron Mountain today confirmed it will end its Virtual File Store (VFS) and Archive Service Platform (ASP) cloud storage services because of “modest levels of adoption.”

Iron Mountain released a statement confirming what Gartner first disclosed in a report last week. According to Gartner, Iron Mountain stopped accepting new customers for its public cloud storage business on April 1 and would officially end the service “no sooner than” the first half of 2013.

“Iron Mountain did recently notify customers of our Virtual File Store and Archive Service Platform that we are retiring these two commodity cloud-storage solutions,” the Iron Mountain statement said. “This decision only affects those using Virtual File Store, a low-cost cloud storage option for inactive files, and technology partners who use the Archive Service Platform as a general purpose cloud for storing their customers’ data. As the Gartner report notes, public cloud service offerings like these have seen modest levels of adoption.”

Iron Mountain has offered to transfer VFS customers to its higher value File System Archiving (FSA) service next year. FSA is a hybrid cloud that uses policy-based archiving onsite and in the cloud. ASP customers will have to move to an alternate service provider or move their archiving in-house.

Iron Mountain launched VFS in February of 2009, and followed with the ASP that let software vendors integrate the Iron Mountain API to use its cloud back end.

EMC also discontinued its Atmos Online public cloud service last July when it decided to market Atmos exclusively to service providers who could build their own cloud offerings. Gartner points out that VFS, Atmos Online and startup Vaultspace’s shuttered public cloud service all focused only on storage without cloud compute services. Nirvanix and Zetta are the surviving pure-play NAS public cloud providers, with others offering gateways for hybrid cloud services.

Iron Mountain’s problems could be internal as well as industry wide. The vendor took a $255 million charge against its struggling digital business in the third quarter of last year and another $29 million charge in the fourth quarter, citing lower eDiscovery revenue than expected. The Gartner report said Iron Mount digital services EVP David Jones acknowledged the reasons to drop the cloud services included profitability pressures.

Nirvanix and Zetta are offering to migrate data to their clouds for all Iron Mountain customers free for 30 days. Nirvanix said it would then offer those customers the option of implementing one of its cloud services.

Zetta said it can migrate data stored in the Iron Mountain service automatically to the Zetta Storage Service with its free ZettaMirror software.

Andres Rodriguez, CEO of NAS cloud gateway vendor Nasuni, said Iron Mountain’s move is not indicative of the cloud storage market. Iron Mountain was one of the cloud providers Nasuni could move file data off to.

“While Iron Mountain’s shutdown of its cloud service is another symptom of consolidation, the cloud storage market continues to expand,” Rodriguez said. “The fact of the matter is, cloud storage infrastructure providers must grow very rapidly, or else they will not achieve the economies of scale that enable them to be profitable. Iron Mountain is an example of a company that was unable to achieve this scale. Over time, we will see more consolidation and a few extremely large players will dominate the market.”

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