Major Moves in Cloud Storage Market Signal a Bright Future

October is turning out to be a big month for the world of cloud storage and the industry has already seen a considerable amount of growth, but the latest word is that the market could be about to become more solid than ever. Investors are taking note because while big name providers at the consumer level like Dropbox have already proved to be popular, and specialty cloud storage services targeting specific business markets are coming into play, much of the market consists of many different smaller providers.

A recent article by Joseph F. Kovar of CRN covered some of the major acquisitions made just last week that are definitely catching the attention of those following the cloud services market. It turns out, cloud storage services may now be getting bought up, as is often the fashion of the tech sector when a market for a certain kind of service starts to mature. Online video today is dominated by YouTube, for instance, a video sharing site purchased by Google several years ago and while other players are certainly to be found in the online video sharing market, YouTube is the brand that holds the most sway. While cloud storage may not have such a titan of a key player today – or ever – it is likely that the market itself will follow the course of consolidation. Consumers and corporations alike may end up having less choice, but the choices they do have will be major companies themselves with far larger staffs and much higher budgets. This could be a good thing, depending on how one looks at it, but it would be hard to argue that it is not inevitable.

Is the Cloud Market Really Starting to Mature?

When a market matures, it tends to see a high volume of acquisitions and in the tech sector, often companies that provide a totally different service or product range use their capital to acquire smaller, growth oriented companies in a different part of the market. Consolidation is the name of the game and this has the effect of strengthening the overall market in many cases. So what’s the biggest move made last week? Kovar suggests that it’s from one of the world’s largest software providers:

The biggest was Microsoft’s planned acquisition of StorSimple, a developer of hybrid local and hybrid cloud storage technology for Windows platforms.

Whatever Microsoft does tends to be big news. It’s no surprise that a company with one of the world’s most omnipresent operating systems and which runs X-box Live, one of the biggest and most powerful online gaming services, would take an interest in new market that’s primarily composed of comparatively small companies. Each of today’s companies are competing over a customer base that’s been predicted to be a billion strong by 2017 and even the most jaded of analysts would have trouble ignoring a number like that.

In a similar move, major cloud storage player Carbonite is planning to acquire Zmanda a provider of an open source cloud backup solution by the name of Amanda. Carbonite already has established an especially good name for itself and by bulking up its offerings, as well as taking one more competitor off the game board, its own growth is a lot easier to pursue.

In a similar move, a cloud storage service called Doyenz which focuses on disaster recovery, is being bought out by Persistent Systems, a company out of India. Its managed services solutions for businesses are primarily provided to companies in the United States thanks to a main office in California, and adding Doyenz’s capabilities to its offerings is sure to enhance its profile in the industry.

Alll 3 of the acquisitions certainly point to a more robust market of cloud storage solutions, albeit for different kinds of clients. Industry observers do say, though, that as much as the market is certainly beginning to mature, it has far from arrived at full maturity and it will likely be a few more years before we see it become the kind of powerhouse it is predicted to be. Still, with a tech giant like Microsoft making big moves and Google providing its own relatively popular service, this is a market anyone remotely interested in technology as a whole should be paying attention to.

So Why All These Major Moves?

The real answer to why all of this consolidation is happening varies per company. Each player has their own strategy and they are working to see their goals accomplished rather than all chase the same goals. Markets are about companies with competing visions, by and large, and this is certainly what we are seeing in the cloud storage sector today. For example, Kovar tells us about Microsoft’s acquisition of StorSimple, explaining that it can help to beef up their current storage service Azure and establish a more robust offering for consumers. He goes on to say:

Other speculation about Microsoft’s rationale for acquiring StorSimple revolve around the need for a better way to take advantage of Azure as a means for improving ease-of-use with Microsoft’s SharePoint application.

Microsoft already has so much to offer its customers that anything it acquires is likely to be absorbed into its previously existing products. It’s still one more way to eliminate competition, though, and keep a company with potential from being acquired by a rival, as well.

The Chief Product Officer of Persistent Systems, Nara Rajagopalan, told the media this regarding his company’s 3rd acquisition:

Doyenz is Persistent’s third acquisition so far this year in terms of IP-led services, after getting the mobile location service of Openwave and the outsourced product development service division of Infospectrum.

So while perhaps not a major global brand like Microsoft, Persistent Systems is approaching things as if they were. What Rajagopalan is asserting here is that his company will likely continue to bolster what it can do by bringing in smaller, more specialized acquisitions that provide key expertise as well as a number of existing clients who will hopefully wind up getting even better service after the acquisition. Although cloud storage has not been a focus for Persistent Systems thus far, it is good news for the industry that a respected provider of tech services is taking such a serious look at what cloud storage can offer.

Carbonite’s acquisition of Zmanda is one that matters to this market because Carbonite is already seen as a major provider of consumer based cloud backup solutions. The motive for the company, according to its CEO David Friend, was to offer its clients something beyond the current services which have done well serving the needs of those using desktop and laptop computers. Small business clients is what Carbonite has been after and many of these clients requested a service that would allow them to backup entire servers – something Carbonite had not been handling. Amanda, the product Zmanda is best known for, looked attractive to the company and, as Friend told the press:

We like the open-source angle. We looked at what was out there. There are 200 man-years of development for Amanda. This is the most solid, the most bullet-proof offering out there.

That’s high praise and clarifies exactly why Carbonite would have an interest in Zmanda. In addition, Amanda has a high level of popularity and works with MySQL, by far the most popular of the open source database solutions for small businesses. Instead of turning to outdated tape backup solutions that come with plenty of risks, more forward thinking small businesses are looking to Amanda to make sure their data is safe. Now that Carbonite has inserted itself into this equation, its brand is certainly sure to take off to even greater heights.

Are You Ready for All This Consolidation?

If you have a favored cloud storage service already, all of this news of acquisitions might make you nervous. The hope among many current cloud storage subscribers is that they will be able to stay with the same company for years or even decades. The companies looking to make acquisitions in this market today know that. They know that businesses and consumers alike want to be able to pick a service, stick with it and simply use it without needing to worry about who is buying what or having changes in terms of service and so forth. The market will certainly continue to change, but the good news is that those entering it do understand what’s at stake for the average customer and appear to be striving to make sure they don’t make any rapid or dramatic changes to the service that has come to be expected of them.

Do you have a smaller cloud storage company you particularly like? Tell us about it. We always appreciate being exposed to new offerings on the market and learning how people feel about the service they are getting. If you would like to let your voice be heard, feel free to leave a comment below. If you have any questions about cloud storage that we can help you with, feel free to leave those, as well. We will respond as quickly as we can.

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