According to IDC, online storage is growing at a 33% CAGR to become a $715M market by 2012. One of my favourite quotes from Don Valentine of Sequoia is “Great markets make great companies .” Judging by the sheer volume of companies in the online storage space, it seems that a lot of entrepreneurs think that the online storage space is a good place to build their next company.

In the relatively short era of online storage, there has been no shortage of sturm und drang . As with all nascent markets, venture capital flooded in, funding many look-a-like companies with little differentiation and many have struggled to truly understand their customer’s needs and differentiate their offerings to sustain themselves over time. The result has been entertaining to say the least. It has been a ghoulish tale of ghosts, zombies, rumors, theft, deceit, and opportunity.

Back in 2007, you had Google’s GDrive still being rumoured but also being 18 months late , feisty startup Mozy winning a large scale contract from GE , ElephantDrive launched and Box.net partnered with Zoho. Fabrik raised another $24.9M, Microsoft released Windows Live SkyDrive and presenter Egnyte was telling the world that they were KM2.0 providers (remember KM 2.0?), and TechCrunch started to wonder where GDrive was (for the first but not the last time.) Nirvanix also made some waves as they released their beta , Iron Mountain – one of the largest document repository companies weighed into the market with a hybrid offering and the Wall Street Journal again warned us of the imminent arrival of GDrive. But it was not to be.

2008 had enough drama for a Michael Lewis novel. Omnidrive staggered around the edge of the deadpool like a zombie with his head still attached by a strand, and then failed again . Five months later, the CEO was still proclaiming “We’re not dead yet.” It was like the scene from Monty Python of the body collectors (see 1:02 to hear Omnidrive’s CEO say: “I think I’ll go for a walk.”)

Troubles also plagued DivShare which flew close to the deadpool before landing on the auction block back in 2007, then managed to have a security breach where user data was divulged from a “malicious user” attack (why on earth was that data available to a malicious user??), but which would go on to quietly acquire “over a million registered users” and become profitable before selling to a new set of owners over at 3Sixty in early ’09.

Still back in 2008, The big guys jumped into the fray with EMC picking up the 1990s darling Iomega (remember the 128MB iomega zip disks?) for $213M,  and Symantec buying SwapDrive for $123M, while AOL was busy shuttering a number of services including their XDrive . There were some incredible successes as well with Carbonite’s CEO taunting the market gods by bragging about their “26 consecutive months of double digit month-over-month revenue growth” and Box.net winning the online storage vendor slot for Dell’s netbook strategy.

With the economic storm in full swing and the inauguration of the 44th President of the United States past, the comedic relief ensued. The now annual rumors of GDrive’s “very near release” made the rounds for the fourth year in a row although few people are falling for that old saw anymore. Yahoo tripped, fell, and lost its Briefcase on the way to work. And perhaps as a statement on the industry’s silliness as a whole, even Dilbert jumped into the market with Dilbertfiles.com. I mean, you almost couldn’t even write that if you tried.

In the births and deaths section of the news this year, Backblaze launched what seems to be the world’s simplest backup service while HP’s Upline went offline for good, going out in a blaze of glory by refunding its users all payments that had been made to the short-lived service. In the wedding announcements, Lacie merged with Caleido AG , creators of Wuala’s online storage system.

I need a simple but powerful online file-server for a small workgroup. I have tested out JungleDisk and found it infuriatingly awful and can’t recommend it at all (to the point that I refuse to link to them). Next up are Dropbox, Egnyte, Box.net and Mozy Pro. I’ll let you know what I find. Or if you have experience with any of them, drop me a note at troy at troyangrignon dot com or leave a comment here.