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Nirvanix prepares to close, tells customers to stop using its cloud

The speculation about troubled cloud storage vendor Nirvanix was true: today the company took steps to begin closing its doors.

Nirvanix did not comment on its future, but advised customers to stop replicating data to the Nirvaix cloud and to move their data off the company’s systems in the next couple of weeks.

Nirvanix sent a notification to customers late this afternoon with suggestions to follow for data migration, because it plans to disable  uploads to the cloud on Sept. 23. The e-mail to customers read: “We are notifying you as soon as possible after making this decision so that you can make alternative plans for storage service. Nirvanix will have resources available to continue to provide service between now and Oct. 15  for you to download your data free of charge.”

“It’s been crazy,” said Chris Pyle, chief executive of Champion Solutions Group, a Nirvanix partner who received a call from Nirvanix at 9 a.m. today. “It’s a complete surprise. Yes, it’s disheartening.”

Champion Solutions Group became a partner about a year ago, Pyle said. He would not confirm how many customers he has using Nirvanix cloud storage, but it’s “enough to cause me a lot of angst.”

Nirvanix advised customers to stop uploading data immediately if Nirvanix is the first copy or second copy of data and advised them to “consider migrating data to another public cloud provider such as IBM-SoftLayer, Amazon S3, Google Storage or Microsoft Azure.”

If Nirvanix handles the  second or third copy of the data, customers should stop uploading data and contact its rapid response team for assistance with data deletion.

As reported here last month, Nirvanix struggled to compete with public cloud providers Amazon, Google and Microsoft, and the pricing wars between those three giants finally pushed Nirvanix over the edge. Nirvanix was first out of the gate as a pure-play large storage cloud provider, but the signs were ominous in recent months. The company switched CEOs twice since last December, when Scott Genereaux left to become a senior vice president at Oracle. Dru Borden replaced Genereaux, and then Debra Chrapaty took over for Borden in May.

Although Nirvanix raised $70 million in funding during its lifetime, industry sources said in August it was reducing spending as it struggled to compete with larger rivals that can afford to offer cheaper cloud storage.

“They never had a cloud compute business to complement standalone cloud storage,” said Henry Baltazar, senior analyst for Infrastructure and operation professionals at Forrester Research. “That probably would have made their offering stickier and increased revenue opportunities beyond cheap and deep storage,” he said.

“It’s not an easy business for a small provider.  They leased the data center space for their sites. Also, the pricing war between Amazon and Google probably had an impact and changed customer expectations on prices.”

Nirvanix signed a five-year OEM agreement with IBM in 2011, forming a partnership to be part of IBM’s SmartCloud Enterprise storage services portfolio. However, IBM spent $2 billion to acquire SoftLayer Technologies in June. SoftLayer offers cloud storage among other cloud services, so it competes with Nirvanix.

“IBM would have been the most likely acquirer since they had an OEM deal,” Baltazar said. “The SoftLayer deal was much more than just cloud storage … but they have [open-source OpenStack] Swift there already. It’s insane. [They have] tons of customers, more than a thousand, and all of that data to move.  This happened before with Iron Mountain Digital exiting cloud storage, but the Iron Mountain service was still relatively new.”

Pyle said National Geographic and Fox News are among Nirvanix customers, but even such big names were not enough to compete with Amazon and Google.

“Storage is very capital-intensive,” he said. “Then you have Microsoft giving away 50 percent of storage for free and Amazon reducing costs by 50 percent.”

San Diego-based Nirvanix was spun off from early Internet storage service provider Streamload in 2007. Niranix offers public, hybrid and private cloud storage services with usage-based pricing. Access is via HTTP using the Nirvanix Web Services API based on REST and SOAP protocols or the Nirvanix Cloud NAS gateway.

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