By: Gigaom
This week in cloud: Why we love/hate cloud storage; Dell’s rough week
Two things are true: Consumers love cloud-based file share and storage systems and consumers have concerns about cloud-based file share and storage systems. Dell makes another acquisition in hopes of bolstering its cloud storage after a rough earnings call.

Given all the vendor action in the cloud file-sync-storage-and share arena, it’s a booming business. Dropbox has netted a phenomenal $260 million in investment for a service that is probably not close to profitable. It now also claims 100 million users, double the year-ago figure and that it is storing one billion (with a “b”) new files every 24 hours. Forbes estimates annual revenue to be in the $500 million range — a contention Dropbox CEO Drew Houston would not confirm. As for profit? That’s anyone’s guess but at Harvard recently, Houston said revenue (and by extension, profit) is almost beside the point.

Now all these numbers (except the revenue figure) are self-reported, so take them with a grain of salt, still, it’s undeniable that Dropbox is hugely popular and unpaid use of the service is booming.

But that doesn’t mean consumers are blind to the downside of cloud storage. Fixya, a popular consumer Q&A site, surveyed its 8 million readers about cloud file sharing and sync sites and came up with the top issues for each in its new cloud storage report.

For Dropbox, 40 percent of respondents cited security concerns first and foremost. There was an issue earlier this year when hackers were able to access some Dropbox user accounts.  Fixya said there’ s not too much users can do in this case, but that those using Dropbox to store personal photos and entertainment files should not be discouraged but should also “steer clear” of using Dropbox to store financial documents.


Box, which positions itself as an enterprise-friendly secure solution got dinged for file upload speeds and security issues by 25 percent of respondents. The company is clearly aware of this issue — it launched a half dozen local endpoints around the world earlier this fall to address that issue.

The odd thing about this picture is that market researcher  IDC estimates that the total market for these solutions was only $213.4 million in 2011 and company has no plans to make a forecast this year. If that 2011  number is accurate,  there are an awful lot of players — at including Microsoft with Skydrive, Google with Google Drive and Apple with iCloud chasing what looks to be a pretty puny profit opportunity. Cloud file-store-and-sync looks an awful lot like a loss leader.

Dell tries to gussy up a bad week with Gale acquisition

Dell, the former PC kingpin which is trying to manage a fraught transition from PC and server hardware maker to a provider of cloud infrastructure and services, had a tough week, reporting on Thursday that its earnings fell a whopping 47 percent for its third quarter. It cited  plunging PC sales and weakness in other businesses as well.

Marketwatch reported that most of the company’s businesses– storage, services, software as well as PCs — all saw sales declines year-over year. Server and networking revenue were the exception, rising 11 percent.

The following day, Dell announced plans to acquire  Gale Technologies, a provider of  infrastructure automation software that works across on-premises and hybrid clouds to provide user self-service capabilities. Gale will be part of Dell’s brand new Enterprise Systems & Solutions unit to be headed by Dario Zamarian, who had headed Dell’s Networking business.

As Om has written here, Dell and arch-rival HP are in the hot seat as they try to redefine themselves and prove their continued relevance in a world where huge webscale powers like Facebook, Amazon and Google are looking for the lowest cost hardware and — in Facebook’s case — building that hardware itself as it disclosed at GigaOM’s Structure Europe conference last month.

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