As GigaOM’s Derrick Harris notes, cloud computing companies are not much different from other types of companies. And with a startup failure rate of 75%, many of the cloud companies today are bound to vanish into thin air.  There are many examples of vanishing cloud companies:  in 2011, 4 cloud storage providers shut down, in early 2012, Megaupload shut down, and even early this month Xeround closed its doors. While it’s nice that some closing companies give users a warning to remove their data by a particular date, others will not be so considerate.

What does this mean for Cloud Providers?

Security is one of the biggest concerns companies have about adopting the cloud.  And with the understanding that a cloud service can easily vanish into thin air, this concern is likely to remain.  So what can you do as a cloud provider to give your company an edge?  The Answer:  Secure your own cloud & mitigate that risk on part of customers.  This means either building your own backup solution or partnering with a backup company in order to provide the full package from the start.  Either of these strategies is bound to increase adoption of your services and decrease hesitation around the cloud.

What does this mean for Cloud Customers?

The possibility of cloud services vanishing means one thing for customers of any cloud-based application - it is crucial to protect critical information ahead of time.  Whether it’ll happen to your cloud provider or not, we cannot say.  But there are ways your company can mitigate the potential risk. TechSoup’s Jim Lynch suggests that a hybrid cloud model could be the answer and that it is important to understand fully a company’s Terms of Service.  A cloud-to-cloud backup solution or a different manner of securing a second copy of your information can protect your company no matter what happens.

Learn more about hybrid clouds.