Storage startup CTERA Networks today unveiled a new product that combines a local NAS device with cloud storage services to provide small businesses with low-cost data protection.

CTERA’s technology, dubbed CloudPlug, works in concert with online hosted storage services to create a hybrid backup infrastructure. The CloudPlug, which is about the size of the average AC power adapter, turns external USB flash drives into NAS devices with automatic backup capabilities.

The CloudPlug contains all of the software and services needed for online backup and file sharing, eliminating the need to install backup software on host machines.

According to Liran Eshel, CTERA’s founder and chief executive officer, the contents of any USB drive attached to the CloudPlug device are automatically backed up online without the need for user intervention.

Online backups stored in the cloud appear as shared drives on the user’s local network, allowing for drag and drop restores.

Eshel says CTERA’s “Cloud Attached Storage” approach is targeted primarily at small businesses and will soon be available through Internet service provider (ISP) and managed service provider (MSP) partners.

Eshel says the back-end cloud storage services can be supplied directly through CTERA’s own distributed cloud storage network or through partner data centers.

CTERA’s game plan is to partner with service providers looking to deploy large-scale managed storage services to small businesses and home power users.

CTERA provides its partners with a Web-based management infrastructure called the CTERA Portal, which handles all aspects of subscriber provisioning, monitoring and reporting.

“We’re working with ISPs and MSPs seeking to integrate new managed storage services as part of their next-generation broadband offerings,” says Eshel.

Pricing for the CloudPlug and its related online storage services has yet to be disclosed and will be partly determined by CTERA’s partners, but Eshel says the cost to end users will be based on a monthly, capacity-based subscription model.