(note: see updates below, at this point we can’t be sure anymore if any data was actually lost or not)

The newspaper gets the information from a lawsuit that was filed by the Boston company last week, alleging that two of its service providers sold it over $3 million worth of defective hardware, linking this to the loss of their customer’s data and as a result, bringing “substantial damage” to its business and reputation.

Carbonite is seeking unspecified damages against Promise Technology, which it is suing for unfair and deceptive business practices, fraud and breach of contract, as well as system integrator and IT consultancy firm Interactive Digital Systems (for breach of warranty). The latter company advised and implemented Promise Technology solutions, which were supposed to monitor multiple computer hard drives in order to assure that they were functioning properly.

I think it would be too easy to point to Carbonite for the loss of data if in fact there were serious errors with the software that were unable to be fixed by Promise engineers – something an executive at Promise Technology categorically denies – but the real victims of course are the customers, who will most likely think twice before trusting a cloud-based storage and backup provider with their files from this point forward. I also think it’s worth pointing out Carbonite has been caught red-handed earlier this year astroturfing Amazon reviews, as reported by David Pogue of The New York Times.

Update: Carbonite CEO David Friend weighs in:

“The failures of the Promise equipment occurred primarily during 2007. We stopped buying the Promise servers and switched suppliers. We allege that the Promise servers had defective firmware and were not reliable enough for Carbonite’s use. We are demanding that Promise compensate us for the cost of replacing their defective products. As for the 7,500 affected customers, their backups were restarted automatically and immediately on our new servers.”

Update 2: Friend checked in again to state that no data was lost in the event, but a commentor says otherwise (anyone else affected who would like to weigh in?):

“I actually am one of those customers and I truly lost data (I had a hard drive lock up right when this happened). It was backing up my personal home PC and I lost over a year’s worth of pictures. The CEO called me personally, and they gave me free service for awhile, but I definitely have multiple layers of backup now.”

This isn’t the first data loss horror story we’ve covered here, and it won’t be the last either.

On a sidenote, I’d change my homepage a bit for a while until things cool down if I were Carbonite.

(Via Cloud Computing Journal, hat tip to Marco Trombetti)

Over on Etsy.com’s handmade marketplace, you’ll find a USB flash drive of Han Solo frozen in Carbonite. And, yes, it’s sold out. But since everything on Etsy is sold directly by the creators, there’s a good chance that we might see another slow rollout of these handmade drives. When they were in stock, the 1GB Han drives sold for $25.

Han Solo Carbonite USB Flash Drive [Etsy via SlipperyBrick/SlashGear]

Online backup site Mozy is giving away 50 free year-long accounts to commemorate the official release of their Mac backup client.

To get yours, send a message to techcrunch@mozy.com that answers the question, “Why do you deserve free backup service for your Mac?” Data-loss horror stories are encouraged. The Mozy team will select the fifty best responses and will email the winners instructions to claim their free accounts.

Mozy is a cloud-based alternative to Apple’s Time Machine, which works very well but doesn’t have the added security of off-site data backup. And at $4.99 a month for unlimited storage, the price is couldn’t be much lower.

We covered Mozy’s Mac version last April when it was introduced as beta. The final version of the software has introduced support for Apple Mail and Leopard, along with a host of technical features like bandwidth throttling and compatibility for programs with resource forks.

In addition to local backup solutions like Time Machine, Mozy faces competition from online storage sites such as Apple’s .Mac, Sugarsync, and recently-released Syncplicity. Carbonite, one of the leaders in this space, works on Windows machines but has yet to release a Mac version.

First the bad news. ProtectMyPhotos, which launched in October 2006, is done. They spent $280,000 in seed capital to try to make the idea work, but ultimately they couldn’t compete new backup services like Mozy and Carbonite. Mozy was recently acquired by EMC for $76 million, and Carbonite has raised $21 million in capital.

We’re therefore putting ProtectMyPhotos into the TechCrunch DeadPool.

But Shaw also writes to tell us that his second startup, DocSyncer, is going gangbusters. The product auto-syncs word documents on your hard drive with Google Docs. In the last five days, he says, users have auto-uploaded more than 200,000 new documents to Google Docs via the product, making DocSyncer by far the largest single contributor to Google Docs. The product appears to have legs.

There’s still no guarantee that DocSyncer will make it as a business, but users like the product. That’s a good start, and now Shaw can focus all of his energy on making it work.

We first covered Mozy in January 2006 as part of an overview of the current generation of online storage solutions. The company has a dead simple way for users to back up their computer hard drives online. Download their software (Mozy supports both Windows and Mac machines) and the backups occur slowly over time. If there is ever a problem, you can restore your hard drive from Mozy’s servers.

Mozy’s chief competitor is Carbonite, another company we’ve tracked over the last couple of years. Carbonite has raised $21 million in venture financing.

Mozy, by contrast, raised just $1.9 million in capital. The round, closed in May 2005, was led by Wasatch Ventures, with participation from Tim Draper and Novell co-founder Drew Major.

That’s quite an exit for Mozy – $76 million on just $1.9 million raised. It’s almost identical to StumbleUpon, which was acquired by eBay earlier this year for $75 million after raising just $1.5 million in venture capital.

Rumors circulated a year ago that Mozy was close to being acquired by Google for significantly less than this. The company eventually passed on the deal, which must have been a tough call. They clearly made the right choice in waiting.

Look for an official announcement of the Mozy acquisition in the next few weeks. Congratulations to Josh Coates, Mozy’s CEO (who refuses to comment on the deal), and the rest of the Mozy team.

Previously Mozy and competitor Carbonite were excellent ways of backing up Windows based hard drives. Both are very reasonably priced at about $60/year – Mozy allows 2 GB to be stored for free and charges $5/month for unlimited storage, while Carbonite has a 15 day free trial and then charges $5 per month with discounts for pre-payment. Neither charge for bandwidth.

With both solutions you download and install the software and the service then slowly begins to backup your hard drive based on your settings.

Carbonite still only supports XP (and is a great choice for Windows users). Mozy is the only choice for Mac users and I highly recommend it after my testing. You can make a simple request to back up up the entire hard drive, or get more granular and just back up, say, iTunes and iPhoto.

Boston based Carbonite is the closest to perfection we’ve seen so far. It requires a simple installation, and users choose to back up their entire hard drive or just parts of it. Carbonite then begins the backup process, uploading 2 GB per day over broadband until finished. Files are encrypted, and there is no limit on total storage. If you delete a file, Carbonite keeps it stored for 30 days in case you change your mind. Carbonite monitors files that are changed and backs them up right away.

And if you have a problem and need to get the data downloaded to a reformatted hard drive or new computer, Carbonite will download at up to 15GB per day over broadband until your system is restored.

Carbonite says that one in eight computers have some sort of data failure. The number one reason is user error, although crashes, fires, floods, theft and viruses all play a part as well. The 30 day cache solves the user-error problem and the fact that data is stored on the Internet solves the fire/flood/theft issue (where USB or network drives may also be affected).

Carbonite has a free 15 day trial (with no credit card required). The service costs $5 per month, with discounts if you pre-pay for a year or two.

The next best solution we’ve found is Mozy, which has a 60GB limit on total storage and costs $5 per month for 30 GB of storage or $10 per month for 60GB. The fact that Carbonite has no limit on total storage makes it significantly more attractive than Mozy.

The downside? It only works on Windows PCs (as does Mozy). Mac users are out of luck for now.

It’s clear that Google is thinking along the same lines with Platypus, their online storage solution. There are fewer details on Microsoft Live Drive, but we can expect a compelling offering from them as well. The holy grail for these services is to be built into PCs and offered to users out of the box. It’s a natural revenue stream for Dell, HP, etc., and they could either build it themselves of partner with a company like Carbonite.

Carbonite has received $7 million in venture capital. Until May 2006 they were focused on photo storage, and launched the current service in May.