Cloud Storage Startup Nirvanix Tells Customers, Partners It's Shutting Down

Joseph F. Kovar and Kevin McLaughlin

September 17, 2013, 01:32 PM EDT

Nirvanix is also informing its cloud partners that starting Wednesday their customers will no longer be able to replicate their storage to the Nirvanix cloud.

Nirvanix targets enterprises with its public, hybrid and private cloud storage services and usage-based pricing. One Nirvanix partner, whose customers use Nirvanix's cloud for disaster recovery and archiving, said he's scrambling to move clients over to other cloud storage vendors.

[Related: NetApp VP Set To Resign, Cloud Evangelist Jumps Ship To Pure Storage ]

Needless to say, the partner isn't happy with the lack of advance notice Nirvanix is providing.

"Nirvanix isn't giving us a lot of runway here," the partner told CRN.

Another Nirvanix partner told CRN that moving all the data Nirvanix's customers stored with the company could be a monumental task.

"When you have, say, a petabyte of data in a cloud, it's not easy to get it out," said the source, who spoke on condition of anonymity. "It takes time to federate the data. It might still take a year to move it all electronically."

Nirvanix couldn't be reached for comment on its future plans for the company.

Founded in 2007, Nirvanix has raised more than $70 million in venture capital funding to date, including a $25 million Series C round last May led by Khosla Ventures. Other investors include Valhalla Partners, Intel Capital, Mission Ventures and Windward Ventures.

Nirvanix has seen a flurry of recent leadership changes, with three different CEOs over the course of the past year.

Scott Genereux, who'd been Nirvanix's CEO since 2010, left last December to become Oracle's vice president of global hardware strategy, planning and product management. Dru Borden, chief strategy officer, took over on an interim basis until April, when Nirvanix hired former Microsoft and Cisco executive Debra Chrapaty as CEO.

Nirvanix has key vendor partnerships that could be impacted by the shutdown. IBM uses Nirvanix's cloud storage technology in its SmartCloud Enterprise portfolio, and Dell in September of 2012 signed a reseller agreement with Nirvanix.

IBM and Dell haven't yet responded to requests for information about how the Nirvanix closure could impact them.

Nirvanix may have fallen victim to a hyper-competitive cloud storage market in which big players like Amazon, Microsoft and Google are constantly cutting prices and giving customers more storage space.

"Storage is a very capital-intensive business for cloud providers," one partner told CRN. "Let's say you spend $8 million on a storage system and the next day Google starts giving away 'x' amount of storage for free," said the source. "As a cloud provider, you can't keep up -- you have to amortize and depreciate the system you just bought."

Nirvanix's impending closure was first reported Tuesday by the U.K.-based tech news site Information Age.

PUBLISHED SEPT. 17, 2013