In Flight Or In Flux? The Demise Of Nirvanix Shines A Light On The Broken Cloud Model


The spectacular demise of Nirvanix could one day be a business school case study.

The provider of cloud storage technology announced its quick death via a Sept. 17, 2013 letter to customers giving them to the end of that month to migrate their data to other clouds, causing a panic as customers and their technology and channel partners scrambled to find an alternative.

Nirvanix shortly thereafter declared bankruptcy, leaving technology partners such as Equinox, CA, and especially Dell trying to recover millions of dollars owed them by the company.

Yet, despite the crash and the initial concerns that customers could possibly lose access to petabytes of data because of a lack of time to migrate it to other clouds, Nirvanix in the end surprised many of its customer-facing partners with unexpected support.

The end of Nirvanix showed that the cloud model is still in flux, and that a wrong decision about which cloud services to use carries a huge potential risk to a company's data and potentially its very life. For some, the lesson is that cloud storage, or even the cloud itself, is a broken model. For others, the lesson is that the cloud is already mature enough to survive potential catastrophes.

The final failure of Nirvanix as a business entity is not a unique story. Cloud and non-cloud businesses fail all the time.

Instead, any case study built on the Nirvanix crash would be a multifaceted teaching opportunity about the risk of going head-to-head with competitors so big they don't care how much money they lose if it means getting rid of potential competition, and in the dangers of signing long-term pricing agreements when prices will only fall over time.

Just as important, the resolution of Nirvanix customers' issues after the vendor crashed also shows just how far cloud technology has advanced in terms of helping customers migrate their data, and offers assurances that the industry harbors a deep sense of community, and even responsibility, when it comes to post-shutdown services.

The Rise Of Nirvanix

San Diego-based Nirvanix was founded in 2007 after the original developer of the technology, StreamLoad, split into separate business and consumer units. The consumer business, MediaMax, eventually failed, causing thousands of customers to lose their data.

By May of 2013, Nirvanix had raised $70 million in funding, including from Intel and Khosla Ventures.

Nirvanix provided enterprise-class public, private and hybrid cloud storage as a service. The company owned its own public cloud infrastructure based in nine data centers, or nodes, around the world. It also used its technology to help customers build private clouds using either the customer's own storage infrastructure or a segmented, non-shared part of the Nirvanix public cloud.

It was a model that worked, said German Garcia, president of Bitopia, a Chatsworth, Calif.-based solution provider and customer software developer.

Several of the applications Bitopia develops require on-line storage, and the company founded it in Nirvanix technology starting six or seven years ago, Garcia said. "We also looked at Amazon S3, but it didn't have the kind of granular controls Nirvanix had," he said.

Over the years, Nirvanix attracted a stable of well-known customers, including several top media companies, health-care companies and educational institutions.

For instance, the company in October of 2011 said that Kansas City, Mo.-based $2 billion health-care solution provider Cerner would deploy Nirvanix as part of its Cerner Skybox Storage service. Cerner expected its health-care clients to use the service, which is no longer available, to consolidate a variety of medical images and data, including patient data, in a secure, enterprise-grade storage cloud.

Another major customer was the University of Southern California (USC), which in November of 2011 signed a deal to deploy 8 petabytes of unstructured data in a private cloud based on Nirvanix technology. The Nirvanix technology was used both for USC's external clients as well as for internal storage requirements, such as the USC Shoah Foundation and the USC Digital Repository.

Nirvanix in August of 2012 said that Fox Networks Group selected the Nirvanix Cloud Storage Network for use as part of a digital content collaboration solution, as well as a replacement for multitier data and tape backup. Using Nirvanix's global namespace capabilities, Fox was able to upload a file in one location and know it was accessible in any other location, and that changes to a single file were immediately reflected across the whole cloud.

Other media companies who worked with Nirvanix included NBCUniversal, which implemented a 3-petabyte storage cloud based on Nirvanix technology, and the National Geographic Society, which moved its backup and archival of large, unstructured multimedia files to the Nirvanix Cloud Storage Network.

Nirvanix's technology also was used as a way to provide cloud storage by such data center operators as Verizon Business and San Diego-based American Internet Services.

Among Nirvanix's resellers were IBM and Dell.

Nirvanix in September of 2012 unveiled an agreement with Dell under which Dell would provide Nirvanix technology as part of its public cloud offering. However, a Dell spokesperson later told CRN the company did little if any business with Nirvanix.

IBM, on the other hand, was a major reseller of the Nirvanix technology, using it as part of its IBM SmartCloud offering. That relationship later took a back seat when IBM in mid-2013 acquired SoftLayer.

Nirvanix in its first few years as an independent company had great funding, widely accepted technology, a growing family of channel partners, and the kind of customer base small technology developers dream of.

Indeed, the main thing Nirvanix seemed to have lacked was the understanding that its pricing model would be destroyed thanks to Amazon, the Internet behemoth with the scale to do pretty much what it wants to do to build its business.

NEXT: The Fall Of Nirvanix