Data grows, and so do storage sites

By Verne G. Kopytoff

New York Times News Service

Published: Sunday, June 5 2011 7:58 p.m. MDT

But one thing still gives most consumers the willies: security. While there are no known cases of purloined or exposed documents on these services, well-publicized hackings and thefts at big companies like Sony, RSA Security and the email marketing firm Epsilon Data Management worry the late adopters. "I wouldn't want to put anything with a Social Security number on a cloud-based storage service," said Hamilton.

A security expert did recently complain to the Federal Trade Commission about how Dropbox encrypted files on its service. Dropbox's employees could get access to unencrypted files, he said, and he accused the company of failing to disclose this.

Houston called the criticism a "rite of passage" and emphasized that Dropbox takes security very seriously, including prohibiting employees from rooting through user files. However, the company, like any other, must turn over data if it is legally required to do so.

In general, Dropbox likens its protections to what banks and the military use. Files saved with Dropbox are encrypted during transmission to Amazon.com's servers, which the company leases. After reaching their destination, those files are divided into discrete blocks, no bigger than a few megabytes. Those blocks are then individually encrypted in storage.

Houston says he saves nearly everything to Dropbox including copies of his driver's license and passport.

"I have five or six laptops, and they are totally interchangeable," he said.

The field is flooded with competitors in part because no one company has a clear advantage in the market, which spans both consumers and business customers.

Two months ago, Amazon introduced Cloud Drive for storing all kinds of files, including digital music. Cx.com, another service, premiered in January with financing from TomorrowVentures, a venture capital company controlled by Eric E. Schmidt, Google's chairman and former chief executive.

Brad Robertson, chief executive of Cx.com, which has around 200,000 users and which is free as it tests its service, said he was not intimidated by all the competition. Focusing on security will help set his company apart from rivals, he said.

"If you take search or email, or any feature where you have new products in the marketplace, you have a while before each one finds its uniqueness," said Robertson, whose company is based in Palo Alto, Calif. He acknowledged that eventually "some get gobbled up and go away."

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