This article originally appeared in the April 2012 issue of INTERNET TELEPHONY magazine.
Storage capabilities at the Bernier ranch recently hit a wall. That didn’t come as a surprise. We buy music and movies like hotcakes, and our daughter is a machine when it comes to taking and making photos and videos. Look across the landscape and this is a very common scene, whether you’re talking about consumer or business use. That, in part, explains why the online storage and sharing space continues to gain traction, and why the field for such solutions seems to grow wider every day.
Global IP traffic has increased eightfold over the past 5 years, and will increase fourfold over the next 5 years, according to the Cisco (News - Alert) Virtual Networking Index released in June of 2011. It forecasts that IP traffic will see a compound annual growth rate of 32 percent between 2010 and 2015. A large part of this growth is due to video. Internet video as of this year will account for more than half of consumer Internet traffic, says Cisco. And it anticipates that, starting in 2015, one million minutes of video content will cross the network every second.
While Cisco’s VNI estimates that data traffic growth will increase 100 percent year over year, some, like the veteran telecom analysts at New Paradigm Resources Group, believe that could be low by a factor of 10. But, however you look at it, there’s a whole lot of data floating around out there. And if we want to storage, secure and share it, online storage is starting to look a lot more attractive than investing in ever more electronic boxes.
Indeed, Forrester Research in a June 2011 report estimates that 46 million people used personal cloud services in 2010, with 10 million of them paying for services. By 2016, according to the firm, personal cloud services will generate nearly $6 billion in direct revenue from 97 million subscribers paying an average of $60 a year. And that’s just the direct revenue. The online storage space also stands to generate an additional $6 billion by 2016.
A wide variety of companies are now moving to get a piece of the online storage and sharing pie, which means that those individuals and organizations that haven’t yet moved their content into the cloud – or are looking for new solutions on this front – have plenty of choices.
Apple (News - Alert) made a big splash last summer with its iCloud offer, a wireless data sync and automatic data backup service for iOS devices, Macs, and PCs. But while all things Apple tend to attract a lot of attention, iCloud was just another addition to an already crowded field.
The long list of companies offering online storage to consumers, businesses, or a mixture of the two, include Box, Carbonite, Dropbox (News - Alert), Egnyte HybridCloud, GoDaddy, IBackup, JustCloud, MiMedia, Mozy, MyPC Backup, OpenDrive, SugarSync, ZipCloud, and broadband service providers including AT&T and Verizon (News - Alert).
Rumor has it that Google could join the crowd as well. A Feb. 10 report by The Wall Street Journal indicates that a free service called Google Drive will launch in short order.
Given its strong brand, broad existing base of users, and wealth of server resources (not to mention the ability to offer free services), Google’s entry could be a game-changer for the online storage space, in which Dropbox and Box reportedly are the leaders.
But, to date anyway, life has been pretty good for the existing cloud storage and sharing providers.
“As we head into 2012, organizations are embracing the cloud from the bottom up and the top down,” said Aaron Levie, co-founder and CEO of Box. “CIOs of the world's largest companies are bypassing their traditional vendors in favor of enterprise cloud startups that are better positioned to meet the demands of today's and tomorrow's workers. This shift will transform the enterprise software landscape, establishing a new set of technology leaders and an entirely new way of working that's more flexible, mobile and social than ever before.”
Box in January announced that it ended 2011 with a three times year-over-year increase in enterprise revenue as organizations like AAA, Dow Chemical, McAfee (News - Alert) and Procter & Gamble signed on to use its services. In 2011, Box raised $129 million in funding, hired 215 new employees, and ended the year with more than 8 million users, doubling its enterprise customer base.
Last year also marked the public offering of storage and backup outfit Carbonite. The company’s per share price debuted at $10 in the August IPO. That was down from the initially proposed range of $15 to $17 per share, but on the opening day shares jumped 25 percent. As of Feb. 13, when this article was being written, Carbonite stock was trading at $10.18. Given the frequent ups and downs of the stock market over many months, that doesn’t seem so bad. But a Feb. 3 article on Seeking Alpha criticizes the Carbonite management team for being “lackluster in terms of presenting to investors and getting them interested in the story.”
“They have been largely parroting the road show script since the IPO,” the Seeking Alpha piece, which suggests Carbonite could be a great acquisition for Constant Contact, goes on to say. “They have not been effective in addressing the threat that comes from more cloud-based infrastructure like the iCloud from Apple or cloud-based solutions like Dropbox.”
In reporting financial results for the quarter ended Sept. 30, 2011, Carbonite Chairman and CEO David Friend, said, “This was a strong quarter for Carbonite with revenue increasing 54 percent year over year. Our founding premise, that every device that creates or stores data needs backup and online backup is the best way to do it, continues to prove out in our marketplace. Our solution is easy to use, affordable,
trusted and secure. It continues to gain significant traction, allowing us to extend our leadership position.”
Meanwhile, smaller online storage and sharing outfits like MiMedia are working to compete by pushing differentiators such as ease of use.
Erik Zamkoff, founder and CEO of MiMedia, recently told INTERNET TELEPHONY that while companies like Carbonite and Mozy repackage enterprise solutions for the consumer, MiMedia goes beyond backup to provide media discovery capabilities that enable customers to view and select their content as they like. And unlike Apple’s iCloud, he added, MiMedia is device agnostic and supports video. MiMedia, whose typical customer gets 250 gigs of storage space for $9.99 a month, anticipates it will reach profitability by the end of this year or early next.
Edited by Jennifer Russell