Iron Mountain confirmed last week it is closing its Virtual File Store services, which is targeted at archival of inactive file data, as well as its Archive Service Platform, which allows software vendors to integrate the Iron Mountain API to leverage the company's cloud architecture.
Arun Taneja, principal analyst with The Tenaja Group, said it was a minor shareholder in Iron Mountain, Elliott Management, that forced the change in strategic direction, calling for the company to go back to its roots.
"I believe it's very hard for companies to do both sides of this," Taneja said. "R&D is very different from being a service provider."
"They know what do best. They create products, but they don't want to be in service provider business," Tenaja said. "I'm not surprised Iron Mountain figured out they we're good at services but they just didn't know how to build products."
An Iron Mountain spokesman told Computerworld that while Elliott Management spurred on the change, the company had been considering selling off its digital business since last fall.
Elliott Management owns about 5 percent of Iron Mountain's stock.
In the future, Iron Mountain will focus on its core digital and paper document archive and digital tape storage business, and it will use third party software to provide online storage services, the spokesman said.
For example, today Iron Mountain uses Hewlett-Packard's Medical Archiving Solution (MAS) software to manage radiological image storage. It also uses IBM's Content Manager OnDemand as its enterprise report management software offering customers access to digitally stored bills, statements, and invoices.
"Those are examples today of how we want to provide cloud services to customers moving forward," the spokesman said. "We're exploring alternatives for digital business. If this process results in a sale, I don't know if we'll continue to store customer's data."
The spokesman added that if the online backup services were sold off, Iron Mountain would like to continue offering those services as a reseller, and would like to continue storing customer's data on site.
Iron Mountain has also committed to returning to investors about $2.2 billion through 2013, including about $1.2 billion of capital returned over the next 12 months through a combination of share repurchases and dividends.
Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian or subscribe to Lucas's RSS feed. His email address is firstname.lastname@example.org.
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