I've lived long enough to have learned
The closer you get to the fire the more you get burned
But that won't happen to us
'Cause it's always been a matter of trust
~Billy Joel, Matter of Trust

When word got out last week about the Sidekick data loss debacle, you knew it would be fodder for every cloud critic on the planet. When you're Microsoft and you lose data, there isn't going to be any place to hide. Steve Ballmer, Microsoft's CEO, gets this.

That's why he was trying to soothe cloud consumer fears, while at the same time pushing the new SharePoint Online service in an interview with Network World yesterday, following his keynote at the SharePoint 2009 Conference in Las Vegas. Perhaps calling the data loss "not good" was minimizing the impact, but overall Mr. Ballmer seems to get the enormity of the problem (even while hoping to minimize it; that crazy political tightrope that CEOs like him must walk).

Kicking Sidekick data to the Curb

Microsoft had a major data loss last week involving Sidekick smart phones. This much is clear. There are indications (at least coming from Microsoft) that they are in the process of recovering the data, and that their initial fears that the data had been lost for good was fortunately not the case. But the Sidekick data disaster has to be seen in the context of the bigger cloud picture, particularly for Microsoft's ongoing cloud strategy.

Fear in the Cloud

Even the most avid cloud advocates must have a niggling fear in the back of their minds that a data loss similar to the one that happened to Sidekick is out there waiting to happen. Microsoft is in the process of trying to build a cloud business. The Network World article reports that SharePoint in the cloud already boasts 1 million users, and they have a big cloud strategy around the Azure platform. There is a lot at stake here involving the whole future strategy of the company and the shift from the desktop to the cloud.

Microsoft Trust Issues

When you're Microsoft, you face an even deeper issues of trust. Many companies are probably wondering if they can trust their data with Microsoft, and this just feeds into those concerns. Ballmer admits that his company has used this scare tactic against competitors, and they will be likely to throw this right back at them:

You better believe they will. They are probably feeding the social networks, printing the brochures and shouting about it from the rooftops, as we speak. This isn't going to go away because whether they fix it or not, the fear is out there, and it has Microsoft's name attached to it.

That's why Microsoft's job just got harder. This one incident could have a major impact on their cloud strategy and it's going to take a lot of soothing talks from Steve Ballmer and a spotless track record to regain the trust. I'm sure this interview is just the beginning.

Photo by bargainbriana on Flickr. Used under Creative Commons License.