Nirvanix Going Under, Gives Customers Two Weeks' Notice

Customers said the company had lost its latest round of funding and could no longer compete with major market players.

Here's a rarity in the storage business: a cloud storage provider apparently goes under water and needs to close down operation, leaving customers only a short time to find new homes for all their data.

Information Age reported Sept. 17 that San Diego, Calif.-based Nirvanix told its customers it is shutting down its operation on Sept. 30, giving customers a mere two weeks to move their data elsewhere.

As of late Sept. 17, Nirvanix had not commented on the situation.

Nirvanix is no fly-by-night IT services provider. It has partnerships with Tier 1 companies such as Intel for SMB cloud storage and IBM for high-end enterprise storage. It also has high-visibility customers, such as NASA, Fox Sports and National Geographic to store video and photos.

Nirvanix made a positioning point about enabling customers to know geographically where their data resided in its worldwide network. However, it is still no easy or simple task to move terabytes or petabytes of data from one cloud provider to another--or to a data center.

Steven Ampleford, chief executive of Aorta Cloud and Aorta Capital, a Nirvanix partner, told VentureBeat that he received a phone call from Nirvanix officials with the news on Sept. 16.

"Armageddon is about to happen," Ampleford said. Nirvanix officials didn’t tell him what would happen if customers don’t get their data out by the end of the month.

Ampleford said he was told that the company had lost its latest round of funding. Another customer said he was told that the company simply could no longer compete with major market players.

Nirvanix has previously raised $70 million in funding from a group of VCs, including Khosla Ventures, Valhalla Partners, Intel Capital, Mission Ventures and Windward Ventures. Its last round was for $25 million, in May 2012.

"Nirvanix's premature demise demonstrates that one size does not fit all," CEO Liran Eshel of independent cloud storage provider CTERA told eWEEK.

"Nirvanix was trying to go for the high end of the enterprise market, but couldn't differentiate itself enough to justify its aspirations. With Amazon setting the tone for large volume, bread-and-butter storage, and bundling it with a full compute stack, other service providers must differentiate their offerings by either verticalizing them, making them part of a fully managed service, or by delivering high-value integrated application support for specific use cases like backup, DR, ROBO storage or file sync & share."

Nasuni CEO Andres Rodriguez told eWEEK that the Nirvanix news "shows that, unless you do your homework, cloud storage can still be a scary place.

"Our ongoing testing of public cloud storage providers show that, right now, there are only two that meet enterprise standards for reliability and performance: Amazon S3 and Microsoft Azure. And even with these two providers, we've developed backstops like cloud mirroring in case of failure. Cloud storage is definitely enterprise-ready, but only if you use an enterprise-ready service."

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...