Cloud Engines raises $15M to turn old hard drives into private cloud servers
Cloud Engines, maker of the Pogoplug set-top appliance that turns external hard drives into private cloud servers, announced today that it has raised $15 million from Softbank Capital and Morgan Stanley.
Context & Ripple Effects
Cloud Engines' Pogoplug appliance sits at the consumer end of a question the industry was actively pricing in 2010: whether personal files belong on rented datacenter storage or on hardware people already own. The $15 million round from Softbank Capital and Morgan Stanley gives the company institutional backing for the second answer.
Morgan Stanley's participation reads as thesis-driven: the firm's [[a:none|Mobile Internet Report]] work in December 2009 forecast a mobile Internet market twice the size of the desktop Internet, and a phone-centric world multiplies the amount of user-generated media looking for a home. Backing an appliance that repurposes existing hard drives into always-on personal servers is a bet on that data growth without betting on datacenter buildout.
First-order effects
- Cloud Engines gains the capital to push Pogoplug beyond early-adopter distribution into mainstream retail channels, competing directly for consumers who would otherwise subscribe to hosted storage.
- Softbank Capital and Morgan Stanley take positions in consumer-owned cloud infrastructure, extending Morgan Stanley's published mobile-data thesis from research into equity exposure.
Second-order effects
- Hosted cloud-storage providers face a marginal competitor whose cost structure shifts spending from recurring subscriptions to a one-time hardware purchase, pressuring consumer pricing across the category.
- A funded Pogoplug validates 'bring your own drive' as a product category, inviting other consumer-electronics makers and router vendors to bolt personal-cloud features onto hardware they already sell.
Third-order effects
- If institutional capital keeps flowing to self-hosted appliances, storage splits structurally between hyperscale rented clouds and a consumer edge of repurposed devices, forcing service providers to compete on software experience rather than raw capacity.
- Investor behavior of this kind suggests research houses' demand forecasts are becoming direct deal-flow drivers, with analysts' theses shaping which infrastructure startups get funded.
The trend: Consumer data ownership is migrating from rented cloud subscriptions toward personal-cloud hardware, with financial institutions underwriting the shift based on their own mobile-data growth forecasts.