Did Microsoft Just Kill the Cloud?

You don't need to be a Sidekick owner on Deutsche Telekom's (NYSE: DT  ) T-Mobile to curse cloud computing, but it's a good place to start.

Microsoft's (Nasdaq: MSFT  ) Danger subsidiary has seriously blown it this month. It has apparently lost the server-stored data on T-Mobile's Sidekick phones that have been recently reset, had their batteries removed, or let their batteries drain out completely before a charge.

"We are thankful for your continued patience as Microsoft/Danger continues to work on preserving platform stability and restoring all services for our Sidekick customers," reads yesterday's T-Mobile announcement. "Regarding those of you who have lost personal content, T-Mobile and Microsoft/Danger continue to do all we can to recover and return any lost information."

Many Sidekick data customers are finding that the Microsoft-stored information on their phones -- contacts, snapshots, calendar entries, you name it -- is gone. T-Mobile indicates that some of the lost content may be recoverable, but it's prepared to offer up $100 in credit to those who suffer "significant and permanent" data loss.

There aren't a whole lot of Sidekick owners out there these days, but this has huge implications for those who generally believe that the cloud has their back.

Robin, Tonto, and lost data
This has happened before, of course. Data-backup specialist Carbonite suffered the embarrassment of failing a few of its customers last year, when its servers acted up. Network outages that result in permanent data loss happen, and it's time to assess how much faith we have in a third party's ability to maintain, back up, and eventually restore the information that computer users aren't storing on their ends.

Few people are talking about data-loss cases and their impact on the cloud-computing revolution, because these problems really haven't hit the big players yet. What do you think would happen if the 250 million-plus Yahoo! (Nasdaq: YHOO  ) email accounts had all of their virtual mail zapped? You know you haven't printed out or backed up every vital email that you've ever received.

What if it were Facebook or Twitter, with a year's worth of status updates and tweets? What if it were the novel you were nearly finished with on Google (Nasdaq: GOOG  ) Docs, or the digital photographs you deleted from your phone the moment you uploaded them to Flickr or American Greetings' (NYSE: AM  ) Webshots, where the tempting proposition on the landing page reads, "Camera full? Upload now."

There would be an uproar in any of these cases, but imagine if there were more than just effort and nostalgia at stake. What if premium cloud-computing platforms crashed with permanent consequences?

The entire premise behind salesforce.com (NYSE: CRM  ) is that it can provide customer-relationship management and other corporate apps in a cheaper and more portable manner than traditional computer-stored software solutions can. It's the poster child for cloud computing in the enterprise space. Meanwhile, Web-hosting giant Rackspace's (NYSE: RAX  ) fastest-growing business segment is serving up cloud-computing apps for its clients. Livelihoods are at stake for these premium providers, so you know they have backups in place in case of hardware failure, software corruption, viruses, or outright theft.

But customers were also paying up for T-Mobile data plans. We can no longer blindly trust all cloud-computing platforms.

The unlikely party pooper 
If there is any irony to the Sidekick fiasco, it's that Microsoft is to blame. On the surface, the world's leading software company stands to lose the most in the cloud revolution. Its Office suite of productivity programs is the industry standard, but cloud computing has birthed cheaper Web-based clones of Word, Excel, and PowerPoint.

And as more programs move to server-stored solutions, Internet connections will trump the spec sheets on user computers. Operating systems will become more interchangeable, and it won't be as necessary to upgrade PCs with a new version of Windows every few years.

So what's the deal with Mr. Softy? Could Microsoft be a cunning saboteur of the revolution that threatens to make it a mere mortal?

No. If anything, this will only hurt Microsoft as it seeks to market cloud-stored solutions in the future, so it can compete with its nimbler foes.

"Remember the Sidekick" will be the rallying cry of its competitors, especially if the data-recovery efforts fail and T-Mobile finds itself handing out a lot of $100 credits.

Computer users will be more skeptical as they go cloud-hopping in the future, but it's not as if they've never suffered data loss on their PC-stored files.

The revolution marches on, with sobering maturity.

Salesforce.com, Google, and Rackspace Hosting are Motley Fool Rule Breakers picks. Microsoft is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz believes that every cloud-computing snafu has a silver lining. He owns no shares in any of the companies in this story. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2009, at 11:22 AM, deathincarnate wrote:

    I think you're taking it a bit too far. Keep in mind that Microsoft purchased Danger, they did not build this solution themselves, and probably have not had enough time to bring it up to par yet.

  • Report this Comment On October 13, 2009, at 11:52 AM, SimchaStein wrote:

    This is bad for Microsoft. The fact that Danger was an acquisition, is the poorest excuse. With $20B in cash, and hundreds of start-ups (and their VC backers) starving for next round and/or exit, MSFT should be fanatic about due diligence. Further, being a late comer to Cloud Computing raises the bar. They have to offer better.

    And where did they get the name Danger? Google's file system is triply replicated. Danger seems like a name someone would pick if they only picked up the word, "disruptive" at tradeshow and said "Cool, let's start a company and be disruptive. Cool cloud computing is disruptive."

    I'm afraid this is symptomatic of Ballmer being out of his league.

    ----

    It more like a car with a drunk driver.

  • Report this Comment On October 13, 2009, at 12:33 PM, TMFBreakerRick wrote:

    deathincarnate, Microsoft paid $500 million for Danger nearly two years ago. That's plenty of time -- and money -- to own up to its mistakes today.

  • Report this Comment On October 13, 2009, at 1:10 PM, PhulishMortal wrote:

    This was completely unprofessional of Danger and Microsoft. Outages occur for many reasons, but that's what backups (and backups of backups) are for. That's what business recovery plans are for. Simply put, there should have been no way for permanent data loss of any significant magnitude to have occurred.

  • Report this Comment On October 13, 2009, at 3:14 PM, Cloudguy wrote:

    That Microsoft uses a company called DANGER says it all. Cant wait to see Azure aka Danger 3.0 since they will skip 2.0

  • Report this Comment On October 14, 2009, at 4:16 AM, timothyrice wrote:

    If you are a Twitter user, remember to visit FilesAnywhere.com on Halloween for a real Trick or "Tweet" (sorry! could not resist).

    So, FA is releasing a new Twitter Backup service later this month, which saves all your Tweets, Mentions and Direct Sends to XLS files.

    You download the Tweet files, or just keep them saved on your FA storage account. Highly useful for backup, archiving, and reusing all your past Tweets and Twitter messages!

    -Tim

  • Report this Comment On October 14, 2009, at 3:22 PM, FoolishSeattle wrote:

    They'll figure it out. Salesforce.com had constant outages in its early days, ticking off their customers until they made serious investments in redundant systems. It took them years to get the formula right. MSFT will figure it out as well.

  • Report this Comment On October 14, 2009, at 4:10 PM, rmb0000 wrote:

    I love using cloud services for just the opposite reason, they provide a backup. Gmail and Google Docs both provide for local caching using Google Gears, which gives 3 benefits: They operate faster as they aren't loading everything over the web each time you open the program, you can use them offline, and, since you have a local copies of everything cached, you have a backup. It really is the best of both worlds imo.

    I hope at some point Google makes that the default setting, but anyone using Gmail or GDocs should make sure they have local caching turned on. You can Google it to find out how : )

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