"It makes no sense for us to compete with [others] that are coming into the market. We're going to play nice with them," Reese said. "The way that people think about iPads and handheld devices and what that's going to mean to data, and how it's stored, and how it's managed -- there's a lot of shifting coming. This will create clarity."
Iron Mountain confirmed last week that it is closing its Virtual File Store service, which is targeted at archiving inactive file data, as well as its Archive Service Platform, which allows software vendors to integrate the Iron Mountain API to leverage the company's cloud architecture.
Arun Taneja, principal analyst at Teneja Group, said it was Elliott Management, a minor shareholder in Iron Mountain, that forced the change in strategic direction, calling for the company to go back to its roots.
"I believe it's very hard for companies to do both sides of this," Taneja said. "R&D is very different from being a service provider."
"They know what they do best. They create products, but they don't want to be in service provider business," Teneja said. "I'm not surprised Iron Mountain figured out they were good at services but they just didn't know how to build products."
An Iron Mountain spokesman told Computerworld that while Elliott Management spurred on the change, the company had been considering selling off its digital business since last fall.
Elliott Management owns about 5% of Iron Mountain's stock.
In the future, Iron Mountain will focus on its core digital and paper document archive and digital tape storage business, and it will use third-party software to provide online storage services, the spokesman said.
For example, today Iron Mountain uses Hewlett-Packard's Medical Archiving Solution software to manage radiological image storage. It also uses IBM's Content Manager OnDemand as its enterprise report management software offering customers access to digitally stored bills, statements and invoices.
"Those are examples today of how we want to provide cloud services to customers moving forward," the spokesman said. "We're exploring alternatives for the digital business. If this process results in a sale, I don't know if we'll continue to store customers' data."
The spokesman added that if the digital services are sold off, Iron Mountain would like to continue offering those services as a reseller, and to continue storing customers' data on-site.
Iron Mountain has also committed to returning to investors about $2.2 billion through 2013, including about $1.2 billion of capital returned over the next 12 months through a combination of share repurchases and dividends.
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