The Cloud Storage World Faces Some Ups and Downs

By | Aug 13, 2012

It has certainly been an interesting few weeks for cloud-based storage companies, with Dropbox facing security questions after an embarrassing breach and Box securing a new round of funding that values the company at over a billion dollars. These two contrasting headlines prove that while the cloud storage industry still has some significant questions to answer, it is here to stay and only growing in popularity for businesses.

The Dropbox Fiasco

The Dropbox situation began when users started to get spam through their email addresses associated with the site. Several users reported that Dropbox was the only site that they used that address with, leading many to speculate about a hack.

What actually happened, while not as scary as a breach of Dropbox's internal systems, is still pretty embarrassing. As detailed in this Infoworld article, a hacker procured log-in information for a number of people by cracking some site or groups of sites online. One of the stolen log-ins was for a Dropbox employee, who just happened to use the same log-in information for their Dropbox account. Saved to the Dropbox account was a paper for a work project that included a number of real emails for Dropbox customers.

As breaches go, this one could have been a lot worse, but it does raise a serious question about the security of information in a cloud environment. IT managers also need to look at the episode as a learning experience, as once again an employee disregarding basic security protocols caused significant embarrassment and potential financial loss.

Box Wins Big

While Dropbox was going through this fiasco, its almost-competitor Box (Dropbox and Box offer the same service, but target different markets) was having a very different experience. The company announced that it has raised $125 million in its last round of funding.

As noted in this CNET article, this funding values the company at $1.33 billion, more than double the $650 million valuation it got just nine months ago.

While Dropbox is going after the consumer space, Box has focused on the enterprise and is seeing some remarkable growth. Box has worked to get its systems compliant with a number of security regulations and has worked to make business customers sure that cloud storage is as secure as internal storage.

It remains to be seen just how confident IT managers will be with saving their information in the cloud, but for now, Box is doing an amazing job convincing companies that their information is safe.

Cloud Storage in the SMB Space

The Dropbox incident will undoubtedly injure the cloud storage industry a little bit, even though it really shouldn't. What happened had little to do with the security issues inherent in storing information in the public cloud, and everything to do with employees simply not following good password policies. The employee in question just happened to work at Dropbox, but really it could have been any business, and a similar situation is almost certainly happening to another company this very second.

For IT managers at midsize companies, the growth of Box is much more pertinent when it comes to storing information in the cloud. The company has gone to great lengths to attract business clients, and while it may always be a mistake to trust mission-critical data to a third party, the vast majority of a company's storage needs come from data that wouldn't significantly damage the company if it got out.

For information that doesn't need to be secret, the cloud provides an amazing storage and collaboration environment that's just simply much cheaper to operate than an internal solution.

It's been an up-and-down kind of week for the world of cloud storage, but there are two main points for IT managers to take away. First, your security is only as strong as your weakest employee, and second, the cloud revolution is here to stay, and will benefit those who trust in it.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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