ownCloud Folds in U.S. as Its Founder Starts New Firm

ownCloud Inc., an open-source Dropbox replacement, shut down its U.S. operations. Meanwhile, its founder forked the code to start a new company.

ownCloud closes, Nextcloud opens

Open-source cloud file storage, sharing and synchronization vendor ownCloud Inc. is shutting down in the United States amid internal turmoil. At the same time, Frank Karlitschek, founder of the ownCloud project, is forking the code to create a new company called Nextcloud.

Karlitschek started the ownCloud project in 2010 to enable users to set up their own cloud storage services in a manner similar to what Dropbox enables. In 2011, ownCloud Inc. was formed with the support of Karlitschek and CEO Markus Rex, in a bid to build a business around the ownCloud technology.

By December 2014, the company had raised $10.1 million, including a $6.3 million Series A round of venture funding led by General Catalyst Partners. On June 2, however, ownCloud Inc. closed its doors in Lexington Mass., laying off its U.S. employees as U.S.-based creditors withdrew their support for the company.

This follows just over a month of drama at the open-source storage vendor. On April 27, Karlitschek said he was leaving ownCloud Inc. over differences of opinion on community management. To try to address some of the concerns and boost transparency, ownCloud Inc. on May 31 announced the formation of the ownCloud Foundation. Karlitschek was not part of the ownCloud Foundation news, and two days later on June 1 announced the formation of the Nextcloud project and company, as a fork of the ownCloud project, the day after which (on June 2) ownCloud Inc. shuttered its U.S. operations.

For Markus Rex, the drama of this past week was largely unexpected. Just last week, ownCloud hosted a customer event in Europe that included the presentation of different use-case and customer success stories. Rex said his goal with the ownCloud Foundation was to unify the community, and he said he was surprised by Karlitschek's news about Nextcloud.

"I can't comment on numbers, but ownCloud Inc., as of now, has no employees," Rex told eWEEK. "That says it all."

The closing of ownCloud Inc. in the United States, however, doesn't mean the end of the ownCloud as a technology. In fact, ownCloud GmbH in Germany as well as the newly formed ownCloud Foundation are still operating. What's not entirely clear yet is how operations in the United States might be supported remotely from Europe.

"It's all being worked out; this situation has happened on very short notice," Rex said. "We're working through what has happened, and I had not imagined that something like this would happen."

Karlitschek told eWEEK that the June 1 news about the ownCloud Foundation came as a surprise to him and that the foundation has nothing to do with Nextcloud.

"We are funded by a private investment from Niels Mache; he is a personal friend and long-term open-source entrepreneur and co-founder of RedHat Germany," Karlitschek told eWEEK. "The investment is a medium-size seven-figure number, which allows us to run Nextcloud for over two years, even without sales."

Karlitschek added that he's very confident that he can build a long-term sustainable company and open-source project with Nextcloud. The early promise of Nextcloud at this point is to be a drop-in replacement for ownCloud, he added.

"It will be possible to upgrade ownCloud to the Nextcloud, and we will try to support this as long as possible," Karlitschek said. "Of course, it is hard to say what happens in the future, but we want to make this as easy as possible for users."

With ownCloud still operational in Europe, it's possible that Nextcloud will become a direct competitor, though Rex has some early doubts.

"Right now, they have no code release; it's vaporware," Rex said.

Rex emphasized that he's still committed to the mission that he started on when ownCloud Inc. was founded in 2011. "We want to give people and companies a way to store and share their private data in any way they want," Rex said. "That is still true today."

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.