Cloud Computing: Cloud Storage Success and Worries

Public Cloud Storage systems have become overnight successes.  Gartner found that 20 percent of organizations are storing all or most of their electronic content in the cloud.

Some of the many available public cloud storage vendors include:

Yaniv Bensadon, CEO at FixYa, said that “Cloud-based file storage is becoming the expected method for file sharing these days, both on personal devices and in the workplace. Such solutions simplify document sharing and collaboration across teams, which is a huge boon for productivity. Still, different users have different needs, and each solution has its strengths and weaknesses.”

But all is not right with these services.  One big question is whether public cloud storage vendors can survive for the long haul and, if not, what  happens to your documents if these businesses shut down.   Beyond that, there are also questions about security and reliability.  And when data crosses country borders, there are some sticky privacy and regulatory issues.

DropBox is perhaps the most prominent example of the wild success that public cloud storage companies are seeing.  A Forbes article reports that a billion files are being saved into DropBox every 24 hours by its more than 100 million users.

It’s not known, but it’s likely, for example, considering that 96 percent of those are using DropBox for free,  that DropBox isn’t yet profitable.   GigaOm reports on a presentation given by DropBox CEO Drew Houston at Harvard where he indicated that rather than revenues, his current priority for DropBox is to grow customer critical mass.  Houston said that  “If people aren’t using it they’ll never pay. If lots are using it we think they’ll come.”  At this point, DropBox is able to take advantage of its $260 million in funding, but it’s not clear what will happen once those funds run out.

A report by FixYa found that the biggest worry that people have about public cloud storage is security.  An example of potential security problems was a breach of data that occurred at DropBox over the summer where hackers compromised their system, stealing an unknown number of user names and passwords.   Other issues reported in the FixYa study finds, for example, Google Drive having folders disappear, and problems reported against file synchronization at many of the cloud storage systems that they surveyed.

Outside the US in particular there are also issues around privacy and compliance with regulations.  Patrick Flaherty, a partner at Torys LLP in Toronto, told the Financial Post that “I think with the cloud, the interesting implications with it are that it’s truly trans-national in nature. In many cloud arrangements, you can have multiple jurisdictions in which the parties who provided the data or who are processing the data are located … and it creates some uncertainty about whose law will apply when.”