I-Drive Turns Corner, Ends Free Web Storage

Joel Strauch, special to PCWorld.com

If you're storing sensitive files on online file server i-drive, you've got two weeks to find a backup for your backups: The service is shutting down.

The online warning is hitting 8 million i-drive customers, as the company joins Driveway.com and others as the latest of the free online storage sites to turn its attention elsewhere.

"Number one, the advertising revenues weren't paying the bills, and number two, people weren't willing to pay for this service," says Galen Schreck, an analyst at Forrester Research.

I-drive representatives emphasize their interest in moving onto more lucrative ventures using the technology. But Schreck's assessment is the crux of the problem for online storage sites, for which switching missions has become a trend.

I-drive plans no layoffs, and it will continue to offer storage space for its clients at 25 universities. I-drive recommends that other customers move their files to former competitor Xdrive, which charges $4.95 monthly for 25MB of storage space. But users will need to move those files by June 18, when i-drive's service will discontinue.

Xdrive, which killed off its free online storage more than a month ago, will continue using the subscription model, says Phil Ressler, senior vice president of marketing at Xdrive.

Shifting From Storage to Software

I-drive plans to sell the software it has developed for storage to companies that offer the same types of services.

"Consumers are going to self-select a service provider--a small number of places that they will go to receive those services, such as their ISP, their wireless service, or their favorite portal," says Arif Janjua, chief executive officer of i-drive. "If that is the case, we should be selling our technology to those people who will be offering those services. But we will not be competing with them by offering the service ourselves."

Schreck says many online storage sites have started looking at big-business customers.

"They're still going to have a hard time," he says. "These things were architected to be free services. Now to try and spin them as if they have been built from the ground up as some kind of enterprise application isn't going to be that believable."

Some of the online storage companies have tied storage services into others, such as wireless e-mail retrieval via a cell phone or personal digital assistant, creating a more appealing bundle of services. For example, Visto.com offers access to e-mail, bookmarks, and calendars in addition to files.

"The application is remote access to critical information outside the office," says Renee Niemi, Visto's senior vice president of marketing. "We offer a series of features as well as access to files from any Web-enabled computer or phone."

"Those kinds of applications are the types of things to do," Schreck says. The online storage companies need to add value to their services or move on to something else, he suggests.

Who'll Be Around?

Many of the early free online storage sites are moving toward a subscription service or getting out of the market entirely. Even Visto says it is uncertain how long the storage aspect of their service will be offered free of charge. What's next for consumers looking to house files online?

"Some of these companies will stay," says Zeus Kerravala, director of e-networks and broadband access at the Yankee Group. "There will always be a need for online storage. But I don't think it's where people thought it would be."

With increased availability of broadband access at home and the growing use of virtual private networks connecting users to the corporate network, online storage isn't as important to the "road warrior" business user as it used to be.

Consumers still have some options. You might find an online locker tied to another service, such as an ISP. Some access providers offer secure storage along with Web page space. Or storage might be available through a portal offering a suite of services. But if you back up data online, be sure you do so often--not just to secure your files, but also so you get adequate warning if the site shuts down.