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August 18, 2015

Wuala demise uncovers fallacy of added value

What constitutes enough added value?

By James Nunns

Wuala, a peer-to-peer cloud storage company is shutting down after operating for seven years.

The start-up company which has been labelled as a pioneer by many, made the announcement in a blog post to its customers.

No reason has been given for the sudden closure but customers have been informed that they have until the 15th of November to get their data out and stored somewhere else, as it will all be deleted.

Customers will no longer be able to purchase storage or renew existing accounts but the company has suggested some alternatives, particularly Tresorit. The Swiss-Hungarian start-up has even developed a tool to help users transition to it.

Istvan Lam, CEO of Tresorit, wrote on the company’s blog to lament the demise of Wuala and gives a little insight into its history.

Lam details the company’s development of a way to ensure zero-knowledge security which prevented even their own administrators from accessing data. Something which he says: "today’s gigantic cloud providers still haven’t figured out."

While it may have been a ground breaker, it has failed to be a long lasting company. Lam suggests that perhaps just building your business is not a viable business model.

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With dominant cloud companies ruling the market and the price of storage plummeting, it is increasingly difficult to forge a path in the cloud market.

It has been suggested that adding value on top is one way, Lam questions: "But what constitutes enough added value? Is providing zero-knowledge security enough of a competitive advantage?"

While he believes the answer is yes, he goes on to state that secure cloud storage vendors need to provide a level of convenience of par with Dropbox-like, non-encrypted solutions.

There highlights the difficulty, while many companies claim they are not competing with the likes of Dropbox, AWS, Box or Google, in most cases they are.

Whether they are competing on simplicity, features or security the chances are there is an over-lapping ability. It will have to be seen whether the demise of innovative start-ups becomes more common place as they fail to gain substantial market share in competition with established companies.

For its part, Tresorit believes it can achieve zero-knowledge and convenience without the need for a trade-off.

Wuala was acquired by LaCie in 2009, which itself was acquired by Seagate in 2012, but left largely to itself. According to a FAQ posting, "Seagate/LaCie will retain the software and all intellectual property rights thereto. There is no transfer or sale of assets, business or otherwise from Seagate/LaCie to Tresorit."

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