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Cloud Storage Poised to Save Enterprises Money: Report

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Public cloud storage services are fast becoming a more attractive option for the enterprise, according to a new report by research firm Ovum.

In its “Clouds Open for Enterprise Storage” report, Ovum said that a new generation of services is emerging in public clouds that can handle live data generated by applications running on customers’ premises. These storage services are designed to be used separately from other cloud services and are attractively priced compared to traditional, on-premises storage systems.

“Not only do they relieve the burden of storing data on customers’ premises, but they also have the multiplying effect of transferring to the cloud provider the responsibility of backing up that data,” Ovum senior analyst Timothy Stammers said in a statement.

Vendors have been pitching online storage services to IT for over a decade, but they never reached their potential or won significant adoption.”Considerable investments were made in these companies, and industry observers predicted that they would thrive. But the opposite happened, and the [online storage service provider] movement collapsed within a few years,” Ovum said in its report.

Cost was a big factor in that failure. Because the online storage service providers were using the same enterprise storage systems as their customers, their services weren’t significantly cheaper than what customers were paying for their own in-house storage. Stammers also noted that these providers faced hefty network bandwidth costs and resistance from customers still unfamiliar with the emerging concept of public cloud services.

But a lot has changed over the past several years. The price of network bandwidth has plummeted and, with IT budgets under considerable pressure in a shaky economy, CIOs are looking for ways to effectively cut costs. Also, far from being a foreign concept, cloud computing has become far more established with the success of Amazon (NASDAQ: AMZN), Salesforce (NYSE: CRM) and other well-known providers.

Ovum also said service providers are starting to use a new generation of object-oriented storage technology, which stores very large volumes of data at far lower cost than conventional enterprise storage systems.

In an interview with, Stammers pointed to several startups that already offer these new cloud services, including Nirvanix, Nasumi and Ctera. “Nirvanix is the oldest with about 700 customers in three years, which is pretty impressive,” Stammers said.

He also noted that many of these new cloud storage providers aren’t even operating the storage systems themselves. Instead, they leverage giant storage clouds run by Amazon, Microsoft (NASDAQ: MSFT) or RackSpace (NYSE: RAX) to get further economy of scale.

These companies offer enterprise customers a gateway system that translates traditional file structures to the object-oriented storage.

“To the customer it still looks like ordinary storage and there’s caching to alleviate latency issues,” Stammers said. “Typically these systems also provide their own backup, but companies may also choose to do that on their own for an extra level of protection.”

David Needle is the West Coast bureau chief at, the news service of, the network for technology professionals.

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