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The provider has a small, cheap computer with a lot of disk space and a fast network connection. You pay a monthly fee for the privilege of keeping a copy of your entire filesystem on the provider's disk. Every day, you use rsync to bring the remote copy up to date.
Then, if you had a catastrophic
disk failure, or
a fire, you just go out and buy new equipment, download a complete copy of all your files from the remote site, and pick up where you left off. There's no need to even configure a new operating system. You could even have a special "disaster" floppy that would reinstate the entire system when you booted from it.
Some numbers: I have about 20GB of disk here. On a typical day, I would need to rsync 35-40MB of data to update the remote copy. A substantial part of this is just bringing my web browser cache up to date, and could be skipped if I wanted. My cheap DSL connection requires about an hour and a half to upload 40MB of data and about four days to download 20GB.
If you don't want to wait four days, and you can't get a faster network connection, you have an alternative: Keep spare hard disks at the provider's offices. If there's a disaster, they take your hard disks off the shelf, copy your data onto them, and have them sent to you by fast courier. Then you plug them in and pick up where you left off. Or perhaps the provider doesn't have extra disks; perhaps they were storing your data on your disks all along.
list of virtual disk drives
list of virtual disk drives over internet [chessforfun, Jul 28 2000, last modified Oct 04 2004]
||It's called "Internet Backup" or "Network Backup". There are dozens of software vendors and hundreds of service providers offering this service, including packages targeted at everything from the occasional home user with a modem to "mission critical enterprise" customers looking for extra redundancy.
||It works almost exactly as you describe. Some use their own custom software; some software can work with multiple service providers (licensed or otherwise); there are even committees working on standard protocols for network backup.
||Its true there are hundreds of companies providing or planning to provide this type of solution ( look at Google's directory for list of such companies ).
||Still , I have one serious doubt here. These days users easily buy computers with 20Gig disk space. How is it feasible for backing up computers with 20G? How many of them you can really backup? Does not look to me a real scalable stuff...it has major limitations..