Summary:

Nirvanix’ fast shutdown spooks current and would-be cloud storage customers more than the prospect of government spying. At least for now.

To say that the PRISM government data scooping program is not a concern to current or would-be cloud users is not correct. It’s just that there are so many more immediate issues to worry about.

News this week that Nirvanix, a U.S.-based cloud storage provider, is shutting down — reportedly after giving customers two weeks to move their data — sparked real worries. After all, cloud storage offerings have multiplied like rabbits over the past year, and the notion that you could entrust business data to a company that appears to be well-funded only to see it shutting its doors could be more paranoia-inducing than the NSA spooks.

One attendee of this week’s Structure: Europe event was stunned at the Nirvanix news, even though he’s not a customer. It’s just that the idea of getting two weeks to provision and move terabytes of data is a daunting prospect.

He recalled one instance when an employee had stored 2 terabytes of business data on a personal server off site and suddenly needed to move that data in-house.

“If you don’t already have the enterprise-class storage provisioned, it can take weeks to do that and in this case, the data copy alone took hours to copy across the network [because] the site they were on has a 10-MB link to the data center – so that took a couple of days to more multiple small files,” he said.

“Given that Nirvanix only gave customers two weeks, I’d be pretty worried about that,” he noted.

It’s also unclear how this closure – which Nirvanix has not yet confirmed – will ripple throughout its partner ecosystem. Nirvanix and IBM, for example, are partnering on enterprise storage.

Update: An IBM spokesman said the company is

“moving quickly to help clients of our Nirvanix-based Object Storage offering to move their data to other solutions such as … the IBM SoftLayer Object Storage or IBM’s persistent storage solution.” 

The pervading concern is that if an apparently well funded cloud storage company –Nirvanix raised about $70 million in venture money – including a $25 million round just a few months ago– can evaporate in weeks, we may be at the beginning of a major shakeout of these companies.

Note: This story was updated at 11:44 a.m. September 25 with IBM’s comment.

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