When an Amazon facility lost power in a storm this week, it caused a major cloudburst of its own.

A decent chunk of the Internet went down, with massive sites like Reddit and Foursquare unavailable, and smaller ones like TheRoot.com having difficulty posting new items. Entrepreneurs couldn’t get onto FastCompany.com. Even The Daily Beast’s commenting system went down. And plenty of other companies had difficulty accessing vital data. Those affected Tuesday morning were clients whose data was stored at an Amazon Web Services (AWS) facility in Northern Virginia.

Amazon.com is one of several large entities offering cloud-based computing services. Other big providers include Rackspace and Concentric. Amazon doesn’t break out revenues for its AWS unit, which provides data storage and processing services to all sorts of companies. But James Staten, an analyst at Forrester Research, says his firm anticipates that Amazon gets about $1 billion a year in revenues from Web services. While Forrester doesn’t provide a current forecast, Staten guesses that the cloud-based infrastructure business is a $2 billion-a-year business.

Cloud-based storage is surfing two huge trends. First there’s the rise of the cloud itself—the shift of data and the software that powers businesses off-site, managed by a third party, yet easily summoned at a moment’s notice. As is the case with many outsourcing decisions, the logic is inescapable. Why bother to buy, install, maintain, and upgrade server farms when somebody else who does it at great scale will do it for you? The second trend is the rise of Big Data. With processing and storage power getting cheaper by the day, more and more businesses rely on constant data-processing to run their business. Think, for example, of the way retailers can use information on consumers’ individual purchasing histories to offer instant sales at the cash register. Cloud-based computing can make businesses more efficient and cut costs, which is very appealing to managers.

“I get the sense there is a wave building,” says Gene Ruth, an analyst at the Gartner Group. When his clients discuss cloud computing, he says, the question has shifted from “why would you do that?” to “why aren’t you doing that?”

But outsourcing has its limits. And these two trends also set the stage for high-profile, concentrated failures. Every day, in homes, businesses, large companies, and networks, there are calamities—outages, computers freezing, systems that are pokey and difficult to access. But it happens behind closed doors. The cloud centralized and publicizes such failure.

Staten, the Forrester analyst, notes that outages like Tuesday’s are “are par for the course, not just in the cloud, but in traditional hosting and corporate data centers.” It was only shocking because “we are making the dumb assumption that the cloud is more highly available than any other data center.”

In theory, the cloud is an easy way to gain some redundancy—back up your data and systems in a remote location in case of a failure at your place of business. But when companies rely on the cloud as the primary residence for their data, they’ve lost the backup. That’s what happened on Tuesday. When companies sign up for AWS, they choose a geographical location for their data. They can choose to have greater redundancy built in—i.e., to have their data and software stored in California as well as in Virginia—but that costs more. Those who didn’t choose to shell out for a backup suffered outages. As Staten notes, “We can’t just stop thinking about redundancy because it is in the cloud.”

It’s kind of like shutting down your well and hooking up to a city water system. Of course you’d rather be hooked up to the city water. It can easily supply the volume to fill up the pool, professionals manage it, it has the financial wherewithal to make necessary capital investments, and a loss of power at the house means you’ll still have water. But it also leaves you prone to disruptions that happen outside your own walls.

As the rapidly growing sector growing suffers growing pains, we should keep in mind that the cloud is a young, far-from-foolproof system—much as the Internet was in the 1990s. Now, it turns out that you have to back up the stuff you have in the cloud. Says Ruth: “I think anybody who expects the cloud to be perfect is in for some bad experiences.”