Perils of the Mobile Cloud

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Another problem is that mobile-phone data tends to be landlocked. Most mobile-phone cloud services also don't let users move information from one service to another. For example, data stored on Best Buy's (BBY) free mIQ storage service, launched Oct.12, can't yet be moved to another provider's service. Best Buy's technology partner, Dashwire, may add the capability in the future, says CEO Ford Davidson. "That's something that will emerge as a problem that needs to be solved; there's no answer now," he says.

To be sure, users of PC software have long contended with hard disk crashes and other technical problems that can eviscerate data. And cell phones are always vulnerable to being dropped, stolen, or lost, which can wipe out users' stored phone numbers and other information.

Mobile Cloud Services Are Growing

But the growing popularity of smartphones, which act as mini-PCs, means service disruptions put a broader array of data at risk. Industry consultant ABI Research estimates that nearly 159 million North American consumers will use mobile cloud services by 2014, up from 13 million in 2008.

Companies including T-Mobile, Nokia (NOK), Best Buy, Microsoft, Apple, Google, and Salesforce.com (CRM) all offer cloud computing services for mobile phones. ABI estimates North American revenue from such services will reach $6.6 billion in revenue in 2014, compared with $519 million last year.

Eventually, mobile cloud services could constitute an even bigger market than services that back up users' data from their PCs. Smartphones house much less on-board memory than full-fledged computers. And users are gravitating toward wireless services that let them share information across their phones, PCs, and even TV sets. "Mobile devices will be the way most users interact with cloud computing," says Alex Stamos, founding partner at data security consultant iSEC Partners, which counts Google as a client.

Extra Backup Spells Higher Fees

You get what you pay for, say some technology vendors. Many mobile backup services are free, or cost just a few dollars per month—not enough to subsidize extensive data backup and sophisticated encryption. "You have less transparency about how data is being secured and saved," says Stamos.

Businesses that pay higher monthly fees tend to get more peace of mind. Salesforce.com's business users pay up to $195 a month for the Web-based customer management software, and Salesforce backs up their data on two sets of servers, plus magnetic storage tape. "We spend hundreds of millions of dollars on our data centers," says Chuck Ganapathi, senior vice-president of products for Salesforce. "Good data protection costs money." Yet even Salesforce's users have experienced temporary service disruptions.

Charging consumers more for rock-solid backup may prove difficult. "It will be harder and harder to charge consumers for mobile cloud services," says Funambol's Capobianco. Best Buy says it hopes to make money from its storage service by pitching users on mobile-phone applications and memory cards and showing them links to Best Buy's online store. The retailer also hopes subscribers will return to its stores to buy additional phones. "It's the extra things you do when you are not the incumbent [that count]," says Scott Moore, a vice-president of marketing at Best Buy Mobile.

Up to the User

Ultimately, the task of protecting mobile-phone data may fall to users. Sidekick customer Martinez now backs up all of her important information on her iPod and e-mails it to her Gmail account for safe measure. "If I have [my data] on enough virtual platforms, they are not going to all crash at the same time," she says. Or so consumers can only hope.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.

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