Intel Capital has taken a stake in San Diego based online storage provider and Amazon S3 competitor Nirvanix.

Nirvanix’s selling points are a claim that its service is easier to integrate than S3 and they offer a service level agreement that guarantees 99.9% uptime (see our previous coverage here.)

Nirvanix said the investment will be used to provide the company with “additional opportunities to further technology advancements of its Storage Delivery Network optimized for media applications”, and “to further accelerate its global build-out of storage nodes to meet swelling demand for its online storage service.”

The size of Intel’s investment was not available, although we did ask and were told that they were not willing to share it. Nirvanix closed a $12 million round earlier in the year that included Mission Ventures, Valhalla Partners and Windward Ventures.

Amazon chief technology officer Werner Vogels just released a very technical paper about a Web storage system being tested internally at Amazon called Dynamo. As applications move to massive grids of computers on the Web (like the ones that power Amazon’s e-commerce site or Google’s search engine and online apps), a new type of Web operating system is developing that treats all of those connected servers as one big computer. (Engineering types can download a PDF of the paper or read it online at the Dynamo link above).

Dynamo is not an alternative to S3, Amazon’s publicly-available data storage service, or competing Web hosting/storage services like Nirvanix and Flexiscale (see previous post). There are no plans at this point to offer Dynamo as a Web Service. It is an internal-only project that sounds like a rethinking of what a relational database should be when computing scales to massive Web proportions (i.e., systems running on tens of thousands of computers).

As Nick Carr puts it:

At the start of the last century, the great engineering project was the creation of an electric grid that could deliver power to millions of users with a reliability and an efficiency that were previously unthinkable. Today’s great engineering project, of which Amazon’s Dynamo is but one manifestation, is to build a computing grid that can achieve similar breakthroughs in the processing and delivery of information.

The race to create a Web operating system is heating up. It is such a huge undertaking that there are only a few companies—Amazon, Google, Microsoft, Yahoo, IBM— that can tackle it. But this time around, it is unlikely that any one of them is going to own it outright.

Flexiscale, a new UK-based on-demand computing service aimed at Web 2.0 startups plans to compete with Amazon’s EC2/S3 service. The move – announced at today’s Future of Web Apps conference in London – is significant because there are so few ‘pay as you go’ hosting solutions in Europe, so the launch of a new service shows there’s real demand of this kind of scalable hosting for startups. Speaking to a few people about this space, I hear that architecturally Flexiscale could well have a better product than Amazon. That’s a big claim. But perhaps one of the key feathers in Flexiscale’s service is that (as well as Linux) it supports Windows while Amazon only does Linux, and offers an SLA, which the latter doesn’t. For more detail on this check out TechCrunch UK.

See our recent coverage of Nirvanix, a U.S. based S3 competitor as well.

As anticipated earlier this month, San Diego based Nirvanix has launched and will offer an alternative to Amazon’s S3 storage service, which is growing rapidly.

The company is positioning itself against Amazon by saying it’s easier to integrate than S3 and they offer a service level agreement to guarantee 99/9% uptime (Amazon does not offer an SLA).

Pricing is $0.18/GB/month for storage and $0.18/GB of data transferred. By comparison, Amazon charges $0.15/GB/month for storage, and $0.10/GB of data transferred in and $0.13-$0.18/GB of data transferred out.

The lack of a service level agreement at Amazon has led many startups to use it for backup purposes only, keeping primary storage under their direct control. They may find Nirvanix as an attractive alternative (and this may also give Amazon an incentive to add an SLA soon).

Nirvanix, however, is affiliated with MediaMax, which has recently gone through a hellish transition that left customers offline and furious. The connection between the two companies is going to create some marketing stress for Nirvanix as it rolls out its new service.

The company has raised $12 million in funding.

Look for new San Diego-based Nirvanix to launch in the next few weeks. It aims to compete with Amazon’s popular S3 storage web service and provide web developers another choice for online storage.

The company, which is affiliated with online storage startup MediaMax (aka Streamload), should also be announcing a $12 million round of financing in the near future. It’s not clear exactly how affiliated Nirvanix and MediaMax are, and the company is keeping the specifics of the relationship quiet for now. There has clearly been a technology swap, though, and MediaMax is now using the Nirvanix service to provide the back end of its storage product. Also, former MediaMax CEO Patrick Harr is now running the show at Nirvanix (MediaMax founder Steve Iverson has retaken the CEO spot at MediaMax).

While the company is keeping quiet about the funding and exactly how it’s affildiated with MediaMax, they are saying that they’ll be filling some of the perceived holes in S3. Hopefully they’ll be offering a service level agreement (Amazon doesn’t).

MediaMax, meanwhile, has been trying to pull through a hellish technology transition (my guess is it was related to the changeover to Nirvanix) that plagued them earlier this summer. They’ve moved their corporate blog to a new site, and are talking openly with users about some of the problems they’re facing.

Disclosure: I am an investor in Omnidrive, which is also in the online storage space and can be considered a competitor to MediaMax and Nirvanix.