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Summary:

Cloud storage got a shot in the arm this week in the form of tens of millions in venture capital and research funding. Despite all the talk about applications and servers in the cloud, the real value lies in data, and it must be housed somewhere.

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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.

Read the full post here.

Image courtesy of Matthew Field.

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  1. I strongly believe in the potential of cloud storage & applications. Thank you for validating our business model!

  2. Brayan dissertation Monday, November 15, 2010

    Indeed, I think that the future of marketing could strongly rely on online or clound storage, It is truly more convenient and needs less time…

  3. EMC to Buy Isilon to Stay in Scale Out Storage Game: Cloud « Monday, November 15, 2010

    [...] scale out storage provider Isilon Systems in an all-cash deal worth $2.25 billion. The deal is another of several high-profile acquisitions and fundings in the scale-out storage space as companies try to handle the data created by more and more online [...]

  4. Cloud storage: now a red-hot market | ZDNet Tuesday, November 23, 2010

    [...] at GigaOm answered this question, pointing to one of the boomlets the market is seeing — storage systems for cloud computing. Tens of millions of dollars in venture capital funding is flowing into this market segment, and [...]

  5. highvelocitysales Tuesday, November 23, 2010

    Books still exist – but Amazon and eReaders changed everything.

    The fax still exists, but when was the last time you actually faxed something vs. scanned it and emailed it?

    Blockbuster vs. Netflix. The new model announced this week is a new “on demand only” version. Talk about Cloud!

    Microsoft uses Cloud in their commercials.

    Cloud is the future. Hold on tight.

  6. ‘Tech bubble,’ disruption or something else? Name this era – SmartPlanet Wednesday, November 24, 2010

    [...] may be a tech bubble emerging, but also boomlets as well — consider the rise of storage systems for cloud computing, observed by Derrick Harris at GigaOm. Harris points out that tens of millions of dollars in [...]

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