Cloud storage booming, but trouble brewing

SkyDrive, Google Drive, Dropbox, Box, and SugarSync have the same feature that got Megaupload shut down, and users still have reason to distrust providers

No matter how you slice it, there's only a finite number of people and companies that will put their data in the public cloud, but that hasn't stopped the competition -- for a free service, no less! -- from turning cutthroat. But the market could be in trouble if the same standards that brought down Megaupload are applied or if providers continue to abuse users' trust.

Over the past few days, two industry heavyweights have tossed their hats in the online storage ring. Microsoft's SkyDrive came first, with 7GB of free storage, tight integration with Office Web Apps, and promised (but not yet delivered) Windows 8 Metro support. The next day, Google announced its long-anticipated Google Drive, improving upon Google Docs with 5GB of free storage and tight integration with Google Apps.

Microsoft and Google, by blessing and massively publicizing the concept, will certainly convert some hesitant users and businesses to the public cloud storage faith, but they'll hardly have the field to themselves. Pick your favorite online storage approach -- iCloud, SkyDrive, Google Drive, Cloud Drive (from Amazon), Dropbox, Box, SugarSync, SpiderOak -- and you can find at least three online reviews right now that will agree with your choice. I guess that's what makes a horse race.

The cloud storage concept isn't new: Google's had online "drive" storage with G-drive since 2004. Dropbox and an early incarnation of SkyDrive (then known as Windows Live Folders) started in 2007. Google Docs has been viable since 2010. But we've never seen a marketing push like the one that's just hit.

I don't think Box (formerly Box.net), SugarSync, or SpiderOak are going to collapse any time soon. Each has a unique niche. SpiderOak encrypts data and doesn't keep the key. Box wants to take on SharePoint in the enterprise, with online workspaces and content management. SugarSync works on all things mobile -- even Symbian, for heaven's sake -- and sports a large number of features none of the others can touch. That said, it's hard for me to envision big growth spurts for any of those three, and some consolidation seems likely.

Dropbox has a lot of useful third-party apps, but its advantage isn't going to hold water for too long since all those third parties are working nonstop to tie into Google Drive and SkyDrive.

Cloud Drive needs a massive face-lift -- and a good ad campaign -- if it wants to compete as a stand-alone cloud storage repository. Right now its only real claim to fame is the integration with Amazon's books and music storage, and the Kindle connection. Then again, Amazon may want to sit this one out, content with servicing Kindle customers.

That leaves iCloud, and I don't see anything but positive fallout for Apple. iCloud has set itself above the fray, with a clearly superior service in many ways. If you don't want to think of it as superior, you can think of it as better integrated with all of Apple's products. And since demand for The Apple Way has never been stronger, iCloud can pretty much ride it all out, looking down at the hoi polloi from afar.

But trouble could be brewing for many cloud storage providers.

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