A month ago an Iron Mountain investor made a few nominations to the company’s board, and required a review of its operations and structure. Yesterday, president and CEO Bob Brennan resigned from his position and Richard Reese was nominated in his place. Between 1981 and 2008, Reese was chief executive for Iron Mountain and since 1995 has

Iron Mountain started off in the 1930’s and became a data storage facility during the Cold War era. During the 1990’s the company became a leader in the physical storage business in North America under the leadership of board chairman Reese. In 1996, Iron Mountain went public and acquired local rivals. In order to keep up with the technological developments and changes, the company moved into digital storage in 2004, a move that did not prove to be fruitful from a financial point of view.

“The foray into digital was a failure, they invested $600-700 million to grow that business and they were barely earning any money. In order to have a fresh set of eyes, the change was needed to be made,” Ken Charles Feinberg, co-portfolio manager of Davis Advisors said.

Dave Vellante, Senior Analyst and founder of Wikibon, indicates that Iron Mountains decision is particularly curious, considering that digital storage is a domain full of potential at the moment.  Withdrawing from the cloud by 2013 is an unfortunate measure in this profitable business.

?Iron Mountain just didn’t have the stomach to keep pouring money into the digital business. While that’s understandable, it’s unfortunate because the company’s Digital vision was a good one. The market is finally moving into Iron Mountain’s sweet spot and the company is exiting what ultimately could be an enormous business,” Vellante notes.

“Near term this will be good for profits as Iron Mountain cuts its cost and will continue to extract rents from its customers. Longer term the economics of the Iron Mountain physical model will give way to new innovations and the cloud will be at the heart of that trend.”

Iron Mountain announced it will not close down its business completely, as its customers were notified of the withdrawal of Virtual File Store and Archive Service Platform commodity cloud storage solutions, so that Iron Mountain will now focus on more specialized services. Starting with the 1st of April, the company is not serving any new clients, but is helping current customers to either migrate their data to another provider or return their data.

Hedge fund Elliott  Management Corp. came up last year with a proposition of converting Iron Mountain into a real estate investment trust so as to cut the company’s tax burden, but this would also imply the automatic distribution of at least 90 percent of its profits to shareholders. As a response, Iron Mountain rushed and in order to prevent a shareholder takeover, Iron Mountain ‘self-administered a poison pill’, a stockholder rights plan through which the company issues new shares under conditions of a shareholder acquiring a 15 percent stake or more so as to dilute the holdings of the shareholder.

Iron Mountain is the third IaaS provider that called it quits up to this moment, following Vaultscape and EMC’s Atmos Online, both having survived the market for only one year.