Editor's Note: This is the second in a two-part series about the potential hazards of storing personal and business data with online services. The first article, published on Oct. 18, 2009, deals with small companies that use Web-based e-mail services.
In early October, Long Beach (Calif.) communications manager Kimiko Martinez discovered that her T-Mobile Sidekick phone had lost her 1,200 address-book contacts, photos dating back five years, and three years' worth of financial information.
The data was stored on Microsoft's Sidekick service. In early October, T-Mobile said it lost the data of thousands of users of its Sidekick smartphone after a computer problem at Microsoft (MSFT). Microsoft says it's working to restore the data.
The glitch gave Martinez more than a few headaches. Since losing her calendar entries, she's missed three meetings. Many phone numbers are still AWOL. "I just have to start all over again," she says. There's another upshot: Martinez, 31, says she's shopping for a new smartphone—and another service provider.
Outages at Hotmail, Gmail As the computer industry creates hardware devices, Web sites, and mobile-phone software that increasingly rely on data stored on remote servers, the potential for waylaid data is becoming a more common problem as well.
Both Microsoft's Hotmail and Google's (GOOG) Gmail have experienced outages this year. Last year, some users had trouble gaining access to Apple's (AAPL) MobileMe service, which syncs up Apple owners' e-mail, contacts, and calendars across Macs and iPhones. BlackBerry maker Research In Motion (RIMM) has experienced service outages as well. "I wouldn't be surprised to hear of another, similar snafu with another vendor," says Shaw Wu, a senior analyst with Kaufman Bros. who covers Apple, RIM, and other hardware vendors.
Cloud computing services for backing up smartphone data may be especially vulnerable. For one, the market is populated with green startups that could go out of business and take users' data with them, says Charles Fitzgerald, a vice-president at Decho, an EMC (EMC) unit that provides PC and mobile storage services to Vodafone Group (VOD) and China Telecom. "There are a lot of fly-by-night players in this space," says Fitzgerald, who spent 19 years at Microsoft and left last year.
"Not All Clouds Are Equal" Consumers may also have trouble retrieving data over slower wireless networks or backing up data over the air in areas with spotty connectivity. That means saving SMS messages, photos, and address book entries can be prone to delays and outages. Vendors' backup policies for wireless devices can also vary widely. "Not all clouds are created equal," says Fabrizio Capobianco, CEO of Funambol, which makes software that helps Vodafone and other carriers back up users' data.
Another problem is that mobile-phone data tends to be landlocked. Most mobile-phone cloud services also don't let users move information from one service to another. For example, data stored on Best Buy's (BBY) free mIQ storage service, launched Oct.12, can't yet be moved to another provider's service. Best Buy's technology partner, Dashwire, may add the capability in the future, says CEO Ford Davidson. "That's something that will emerge as a problem that needs to be solved; there's no answer now," he says.
To be sure, users of PC software have long contended with hard disk crashes and other technical problems that can eviscerate data. And cell phones are always vulnerable to being dropped, stolen, or lost, which can wipe out users' stored phone numbers and other information.
Mobile Cloud Services Are Growing But the growing popularity of smartphones, which act as mini-PCs, means service disruptions put a broader array of data at risk. Industry consultant ABI Research estimates that nearly 159 million North American consumers will use mobile cloud services by 2014, up from 13 million in 2008.
Companies including T-Mobile, Nokia (NOK), Best Buy, Microsoft, Apple, Google, and Salesforce.com (CRM) all offer cloud computing services for mobile phones. ABI estimates North American revenue from such services will reach $6.6 billion in revenue in 2014, compared with $519 million last year.
Eventually, mobile cloud services could constitute an even bigger market than services that back up users' data from their PCs. Smartphones house much less on-board memory than full-fledged computers. And users are gravitating toward wireless services that let them share information across their phones, PCs, and even TV sets. "Mobile devices will be the way most users interact with cloud computing," says Alex Stamos, founding partner at data security consultant iSEC Partners, which counts Google as a client.
Extra Backup Spells Higher Fees You get what you pay for, say some technology vendors. Many mobile backup services are free, or cost just a few dollars per month—not enough to subsidize extensive data backup and sophisticated encryption. "You have less transparency about how data is being secured and saved," says Stamos.
Businesses that pay higher monthly fees tend to get more peace of mind. Salesforce.com's business users pay up to $195 a month for the Web-based customer management software, and Salesforce backs up their data on two sets of servers, plus magnetic storage tape. "We spend hundreds of millions of dollars on our data centers," says Chuck Ganapathi, senior vice-president of products for Salesforce. "Good data protection costs money." Yet even Salesforce's users have experienced temporary service disruptions.
Charging consumers more for rock-solid backup may prove difficult. "It will be harder and harder to charge consumers for mobile cloud services," says Funambol's Capobianco. Best Buy says it hopes to make money from its storage service by pitching users on mobile-phone applications and memory cards and showing them links to Best Buy's online store. The retailer also hopes subscribers will return to its stores to buy additional phones. "It's the extra things you do when you are not the incumbent [that count]," says Scott Moore, a vice-president of marketing at Best Buy Mobile.
Up to the User Ultimately, the task of protecting mobile-phone data may fall to users. Sidekick customer Martinez now backs up all of her important information on her iPod and e-mails it to her Gmail account for safe measure. "If I have [my data] on enough virtual platforms, they are not going to all crash at the same time," she says. Or so consumers can only hope.