In the last post, we discussed some of key advantages cloud computing presents for small businesses and our thoughts around how the cloud can be a good fit for the SMB market. Now, we want to dive into the other side of the argument. Like many Americans, the team at NETGEAR has spent the summer glued to our computer screens and TV sets digesting all the news surrounding the current NSA scandal.

As we unravel why and how the federal government was able to indiscriminately gather and examine personal records, the story raises a lot of interesting questions in the public vs. private clouds debate and overall concerns the concept of the cloud presents – primarily that when you trust anyone else with your data by “renting” someone else’s hardware, you never really know who is going to have access to it. 

Don’t get us wrong, NETGEAR fully believes in the experience afforded by the cloud, as it related to storage.  And while the NSA development probably won’t kill the cloud – the cost benefits are far too great and immediate – we think it’s important to also examine other options as the decision to take advantage of immediate cost benefit could result in much larger costs related to loss of data, privacy issues or leaks. In reality, home users and SMBs can get the cloud experience – access anytime, anywhere and from any device – using hardware that features cloud access and management, without ever allowing the data to pass through any hardware not owned by the user.

Typically, there are two considerations that often prohibit cloud adoption – cost and security. The security concern is pretty intuitive; right now at least, data that resides on your hardware is more secure than when it lives on someone else’s server. While the idea of “renting” inexpensive infrastructure from a public cloud provider can often seem very attractive to small businesses with small budgets and even smaller IT staffs, it is important that every business ask itself what the repercussions would be if private data or the data of its customers was suddenly available to hackers or even government agencies. By owning infrastructure and keeping data in house, the risk of losing data or having it exposed to prying eyes is reduced significantly.

In terms of cost, we all love services like Dropbox or Box.net but using a feature-rich NAS enabled with an array of native features for managing your data, you pay a one-time cost for the hardware rather than a cloud service with an ongoing fee in perpetuity that is subject to increases over time. Additionally, hardware and local storage presents a big advantage over the cloud in terms of speed. When utilizing cloud storage solutions, you are at the mercy of your internet connection.

So are the NSA leaks cloud computing’s newest and biggest hurdle? Perhaps.  A recent report from the Information Technology and Innovation Foundation estimates that the US cloud computing industry stands to lose anywhere from $22 to $35 billion over the next three years because of the incident. But in reality, cloud computing could face its biggest threat from hardware options that offer customers the ability to keep their data in-house without sacrificing the anytime, anywhere cloud experience.