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InfoQ Homepage News Cloud Storage Provider Nirvanix Shutting Down

Cloud Storage Provider Nirvanix Shutting Down

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Cloud storage provider Nirvanix has announced that it is shutting down. The front page of their web site is presently showing:

Nirvanix Customers,
For the past seven years, we have worked to deliver cloud storage solutions. We have concluded that we must begin a wind-down of our business and we need your active participation to achieve the best outcome.
We are dedicating the resources we can to assisting our customers in either returning their data or transitioning their data to alternative providers who provide similar services including IBM SoftLayer, Amazon S3, Google Storage or Microsoft Azure.
We have an agreement with IBM, and a team from IBM is ready to help you. In addition, we have established a higher speed connection with some companies to increase the rate of data transfer from Nirvanix to their servers.
We are working hard to have resources available through October 15 to assist you with the transition process, and have set up a rapid response team...

Giving customers just a few weeks to migrate their files to other storage providers has called into question the wisdom of using cloud storage services (or indeed any cloud services), particularly from smaller startup providers. Nirvanix was well funded, having taken a total of $70m in venture capital, with the most recent $25m round taking place in May 2012. Cloud commentator Ben Kepes has argued that this is a wake-up call for better due diligence, though he acknowledges that Nirvanix would have passed most scrutiny.

Cloud storage is a high margin business. In a recent presentation at CloudCamp London Matt Johnson from Eduserve illustrated that there’s typically a >3x mark up on equipment and running costs for storage services. Nirvanix would also have had costs for sales and marketing activities, which Joe Weinman points out in Cloudonomics can be the factor that makes a cloud service provider more expensive than in house provision.

As of 1 Oct an addendum to the original home page message makes it clear that Nirvanix has run out of money:

On October 1, 2013, Nirvanix voluntarily sought Chapter 11 bankruptcy protection in order to pursue all alternatives to maximize value for its creditors while continuing its efforts to provide the best possible transition for customers.

The first signs of the shutdown came on 17 Sep, with an email to customers advising them that they had two weeks to migrate data elsewhere. That deadline has now been extended to 15 Oct. Initially the company web site remained unchanged, and wasn’t replaced by the present shutdown message until 27 Sep.

UK based Aorta Cloud has been trying to pull together a rescue package for Nirvanix that combines fresh funding and industry partnerships (including IBM), but there’s been no update on that since 25 Sep.

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