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Nirvanix cloud customers face worst nightmares

As the Nirvanix cloud evaporates, customers ask: What do you do when your cloud provider goes out of business?

The bombshell news this week that cloud storage provider Nirvanix was going out of business turned a cloud customer's worst fear into reality. The sudden end raises the question: What do you do when your cloud provider goes out of business?

For Nirvanix cloud customers, this is no longer a hypothetical situation. The situation leaves enterprises and managed service providers (MSPs) scrambling to move their data off the Nirvanix cloud before it shuts down its data centers by the end of September.

One Nirvanix MSP partner, who requested anonymity, said he has a hybrid cloud setup, and he's been working to get 12 TB of his customers' data moved from Nirvanix systems to his on-site SAN.

He said his main concern is to get the data off the Nirvanix cloud before Nirvanix shuts down the servers that store the data's authentication keys.

"That's the short-term solution so customers can continue to access their data," he said. "I don't know about the long-term solution. I'm trying to figure that out. I need to find a new partner, and I don't know who I will choose because now I'm a bit gun-shy. I had a few contracts on the table; they were big hotels. If I closed the deals, I would have been screwed."

Nirvanix sent a confidential email notifying customers the company would discontinue service on Oct. 15 and that they have two weeks to move data off its cloud.

The plan is to close two or three of the data centers Nirvanix leased from CoreSite colocations and Equinix data centers located in the United States, Asia and Europe. The rest of the Nirvanix data centers will be used to pull data out of the systems. Nirvanix has a program called Direct Connections, in which customers could use the Internet or the LAN for high bandwidth to move data.

"The customers need to determine how much data they need to bring back," said Henry Baltazar, senior analyst for infrastructure and operations at Forrester Research. "If they did backup, they can choose how much they want back. If the documents were primary and archiving, they have to get that data back."

Partners are trying to get Nirvanix to extend the deadline to two months. One Nirvanix customer and partner, U.K.-based Aorta Cloud, is scrambling to put together financing to buy Nirvanix or at least keep it running long enough to allow customers enough time to retrieve their data.

Aorta CEO Steve Ampleford, who also runs Aorta Capital, set up a Nirvanix rescue package website, soliciting contributions from Nirvanix customers to go with at least $2 million that he said his company and an outside bank have committed.

In the latest update to his site today, Ampleford said he has proposed three options to Nirvanix: a partnership supported by IBM and SoftLayer, a similar proposal by another large company that has not been identified, and a structure backed by BroadCloud that would allow customers to move their data.

But as Ampleford pointed out on his site, "These still need technical validation (which is not a simple exercise) before anything can be formally presented to the community." And those options would only help customers with data in the Nirvanix public cloud. He said he's still working on helping those with data in their own data center that Nirvanix managed and those who connect to the Nirvanix cloud via application programming interface.

IBM Global Services has an OEM deal with Nirvanix, but IBM's acquisition of Nirvanix competitor SoftLayer is considered one of the triggers of Nirvanix's demise.

Customers using Nirvanix as a private cloud are in a better position because their data still resides in their data center. Those using hybrid or public models have the bigger headache. Most of them used gateways to push data into the public cloud. Each gateway company uses proprietary protocols to transform the data to optimize it for the cloud.

The problem is that gateway companies such as Nasuni, Panzura and TwinStrata have no control of the back-end storage or the network.

"We've had a half a dozen customers asking us for help, but there is very little I can do for them," Nasuni CEO Andres Rodriguez said. "There is not enough bandwidth to get the data out in time."

Nasuni stores its customers' data either on the Amazon or Microsoft clouds. Other cloud controller vendors allow customers to pick their own cloud provider.

Forrester's Baltazar said Nirvanix MSP partners are in the greatest risk. "I worry more about those that have hundreds of terabytes and petabytes," he said. "All these guys that are MSPs have a lot to lose."

Nirvanix has Fortune 500 companies using their cloud, including National Geographic, Fox News Group, the Federal Bureau of Investigation, General Electric and NBC Universal.

The cloud provider who requested anonymity said the news came as a shock.

"Their setup was awesome," he said. "They had a who's-who of customers. It's shocking. This was a shining-star product. I loved these guys. Nobody [else] syncs automatically to multiple sites. They had authentication and multiple gateways. SoftLayer is good enough but it does not have the bells and whistles Nirvanix had. I don't know what happened."

Despite all that awesomeness, startup Nirvanix could not compete on price with public cloud giants such as Amazon, Google and Microsoft. Nirvanix raised $70 million in funding, with the last round of $25 million coming in May 2012. Forrester's Baltazar said the company was going for a fourth round of funding and suspects the deal fell through.

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