A representative said the privately held company had "repositioned" itself as a technology platform provider and will concentrate on developing its Driveway Storage Platform instead of its free online storage for noncorporate customers.
As part of the restructuring, the company laid off 47 people last week. Roughly 18 people remain, including many of the original engineers and developers who founded Driveway in the mid-1990s. The company granted four weeks of severance pay to all workers.
Gina Rubattino, director of corporate public relations for Driveway, said the company simply could not support its work force in its attempt to be a free storage service. The company was attempting to generate revenue for the free service from advertising fees.
"Everybody in this storage space, if they were giving away the product for free, is either gone or drastically trying to reposition their models because the enormous cost of hosting makes a free model unfeasible," Rubattino said. "The dot-com free membership business just wasn't viable. The board decided that...given costs, free storage wasn't necessary for what our core strength was, which was being a software company."
Wednesday, Driveway sent an e-mail to individuals, notifying them that the company is no longer accepting new customer registrations, file uploads or purchases of additional space. Driveway will discontinue all Driveway.com file sharing and storage services March 5, according to the e-mail. After that point, registered customers will no longer be able to access any files stored at Driveway.com.
"We have appreciated your support and use of Driveway," the e-mail stated. "Also, please note that in accordance with our privacy policy, all user identity information and files stored on the Driveway.com Web site will be deleted once services are discontinued."
The e-mail then recommended that people sign up for storage services with the popular site FreeDrive. With more than 12 million members, FreeDrive is the largest online file storage service. In addition to 50MB of free space, FreeDrive offers chat, CD burning, photo albums, and other services that Driveway.com did not offer to individual customers.
Antivirus software maker McAfee.com is also gunning for market share in the corporate and consumer online data storage sector. The company announced in November plans to offer to the corporate market the security software that it has been offering to consumers over the Web.
