This week the news trickled out that Iron Mountain, the big records management company, is apparently planning to close two of its cloud-based services, Virtual File Storage and Archive Services Platform. The company reportedly stopped taking new customers for either service after April 1. The news was communicated by an analyst firm and was out of the bag by the morning of April 11.

Savvy observers noted that Iron Mountain’s move follows the 2010 closure of two other cloud storage service operations, EMC’s Atmos Online and Vaultscape, a start-up. Three closures in the “infrastructure-as-a-service” (IaaS) realm and you might have questions about the viability of the model and cloud computing, or at least cloud storage in general. So does Iron Mountain’s decision represent something larger going on in the market?

Probably not, in my opinion. Iron Mountain is going through some serious self-examination these days as a result of 1) continued disappointing results in its digital business and 2) an investor proposal to covert itself into a Real Estate Investment Trust (REIT) and to slow or stop investment in the digital part of the business. The digital unit, despite a huge investment in acquiring technology and people over the last decade, has never been especially profitable or shown significant organic growth. Most recently, in FYQ4:10, the digital segment revenue fell by 3 percent year-over-year, as gains in back-up and archiving services were offset by the divestiture of its domain name management product line and a drop in E-discovery revenues. The company’s digital strategy has always been to help move its physical records customers to digital information management and drive business through every step of that transition. But the company has run into serious competition from technology companies on the digital side, and in the past year it has moved to re-integrate the digital business back into its traditional physical business and abandon “Iron Mountain Digital” branding. And there have been significant management shuffles over this period as well.

No doubt customers are still feeling their way through the choices presented by cloud storage, but I think it’s more accurate to read Iron Mountain’s shuttering of these services as tied to company-specific issues, instead of as a referendum on cloud storage.

[Cross-posted at Wikibon Blog]