Hundreds of Millions of Reasons to Believe in Cloud Storage

Cloud storage got a big shot in the arm this week in the form of tens of millions in venture capital and research funding. Why? Because despite all the talk about applications and servers in the cloud, the real value lies in data, and it must be housed somewhere. As I describe in my Weekly Update at GigaOM Pro (subscription required), the promise of cloud storage is driving funding and spending into the hundreds of millions.

Cloud storage represents a major opportunity for organizations because it lets them store terabytes of data without paying to build and maintain traditional systems. For new web-based startups, cloud computing might fill the entirety of their storage needs –- primary, backup, archiving, whatever. For more traditional businesses, much of the value lies in backing up primary data and archiving relatively low-value data for compliance reasons.

It’s no wonder a 451 Group report released this week estimates that cloud storage will account for 40 percent of $964 million in “core” cloud revenue this year. For an overview of some of the more promising startups, including Nirvanix, Zetta and Gluster, which combined for $30 million in funding this week, see my post from earlier this week.

Cloud storage is not perfect, however, and there is work to be done in areas like security, reliability and lock-in, in particular. The latter two were addressed in part this week. Targeting reliability, particularly of the Internet, Amazon Web Services released its Multipart Upload feature for its S3 storage service. IBM Research is tackling interoperability thanks to a $21.5 million (€15.7 million) grant from the European Union. The VISION Cloud project, led by IBM Research but comprised of representatives from various industries, aims to improve cloud storage by developing capabilities across four fronts, including “full data interoperability.”

It’s true, of course, that cloud storage has a long way to go before it approaches the performance and features of on-premise systems, but the promise is evident. Customers are buying it and VCs are funding it because storage is important, and backing up data in the cloud is cheap, easy and increasingly risk-free. And because for a growing number of small companies, it’s the only way to go.