August 31, 2010, 11:40 AM — Who is doing it: Companies that can't afford multiple data centers or that want to get into a new location quickly can turn to a service provider to store their data. Ethernet switch startup Arista Networks uses a service from Egnyte to back up PCs and share files internally, as well as with partners and customers. Each time Arista sets up a sales operation in a new country, its data is available at the end of any broadband connection. Cloud-based storage on U.S. soil can help companies get around certain countries' censorship rules, says analyst Andreas Antonopoulos of Nemertes Research. It may also support use of encryption technologies that are subject to export controls.
How it works: Client software or just a password gives employees at new sites access to corporate content stored in those centers. Some providers, such as Amazon, can combine storage with computing resources-a good way to go if Internet bandwidth is expensive in a new market and you want to use thin clients to access servers elsewhere, Antonopoulos says.
Growth potential: IDC (a sister company to CIO's publisher) estimates that worldwide revenue from cloud storage services totaled $2.7 billion in 2009, and predicts it will grow to about $12 billion by 2012.
Read more about cloud computing in CIO's Cloud Computing Drilldown.