Throwing Caution to the Cloud: The Risk of Online Storage

It’s a fair question: When you can buy a 500GB hard drive for less than 100 bucks and 8GB flash drives for $17, is it worth using an online backup service? With literally dozens of free and low-cost online storage sites to choose from today—and more popping up with the regularity of the ocean tides—whom you trust your data with involves knowing the risks, the conveniences, and the ultimate costs. Online storage vendors all justifiably cite the importance of storing your data in a secure, remote location. If your laptop is stolen or damaged, your data is still retrievable. Access to your online data vault is available anywhere you have a Web connection. And some services even support access from iPhones and other Web-enabled phones.

Beyond free 1 to 2GB accounts, monthly subscription costs are generally $5 and up for larger quantities of “cloud” coverage. Online transfer speeds vary, however, and can be glacial depending on both your bandwidth and the company server’s. Out of Business, Out of Luck? Next comes the issue of whether your online data vault will remain in business. Rick Sizemore, chief strategy and development officer of analyst group MultiMedia Intelligence, isn’t exactly bullish on their future. “Because of current market conditions and the already-crowded field, there will be a shakeout for many of the online storage companies,” Sizemore said. “They will either disappear or consolidate.” And just what happens to your valuable data should your online backup provider goes out of business? Most likely you won’t lose it, but you might have to scramble to find a new cloud vault to transfer your stuff to. AOL’s Xdrive, which recently went out of business, gave its customers nearly six months’ notice of the impending shut down, certainly enough time to retrieve files. Customers of other now-defunct storage sites, Omnidrive and MediaMax, were not as fortunate in claiming their critical data. Those sites went down without warning for financial and technical reasons, leaving their customers in the lurch and their files merely cloud vapor. “Xdrive’s demise was because its model of free space supported by advertisers does not work with online storage,” proposed Aaron Levie, cofounder and CEO of the prospering “You need massive amounts of page views to make money. And besides, people don’t like ads around personal data—even when the storage is free.”, which offers 1GB of free storage space as well as larger, fee-based plans, has seen rapid growth with both individuals and businesses. “Our model works because our costs for the free service are essentially subsidized by our corporate customers, partnerships, and product tie-ins,” Levie said. “Businesses are replacing many IT functions by outsourcing them with online services, which handles storing, sharing, and online collaboration for lower costs than if done internally.” has partnerships with companies such as Creative and Dell, which gives online photo-sharing space to owners of Creative’s Vado Pocket Video Cam and remote storage to users of the Dell Inspiron Mini. Doing Your Homework It’s those ancillary partnerships that prospective online consumers need to check out before they sign up with any particular storage service. As Levie points out, “People need to see who is storing their data, who is financing the storage vendor, who the company is partnered with, and what are the value-added services provided, such as photo or file sharing and ease of data transfers.” Before signing up, a look at the latest press releases for a given online backup company can reveal not only corporate partners and financial backers but the extent and quality of that vendor’s product tie-ins. For example, leading online storage provider is owned by EMC, whose other divisions include Iomega, a leading hardware storage company. In fact, Iomega is leveraging its EMC connection by bundling free online MozyHome backup service with its wide range of portable hard drives. Numerous other hardware and software companies are throwing in free online storage and/or file sharing to attract potential purchasers. Adobe includes a one-year membership (usually $50) and 20GB of space for its online photo backup/sharing site,, with the Adobe Photoshop Elements 7/Adobe Premiere Elements 7 bundle. Dell is including 2GB of Dell DataSafe storage to buyers of various models of notebooks. And ASUS includes up to 60GB of online storage for its Eee PC customers. Even SanDisk ( sends a message about being safe rather than sorry by including 4GB of online backup (free for the first 6 months, then $29.99 per year) with for its $30 4GB Cruzer Titanium Plus USB flash drive. Inexpensive USB flash drives are a great way to save important documents, but a remote, online backup solution keeps data doubly secure and retrievable. Better Safe Than Stolen Devin Knighton, a spokesman for Mozy, related the story of a Mozy customer whose Mac notebook enabled with Mozy’s autobackup was stolen. The thief inadvertently took pictures of himself with the Mac’s built-in camera. When the images were later autosaved to Mozy, the police were able to track down the laptop larcenist and get the Mac back. “Then there have been many people whose computers were lost or stolen, but because they had online backups they were able to restore those files to their replacement PCs,” Knighton added. External media such as USB thumb drives and portable hard drives offer markedly faster transfer speeds, cost a flat, one-time fee, and are easily transportable. Yet they are still susceptible to loss or mechanical failure—making that secondary online backup all the more attractive. Of course, you don’t want to get caught like the sorry customers of MediaMax and Omnidrive did, so just be sure to do a preliminary check of a storage provider’s reputation and the strength of its business partners and clients.