It is feared that some users of Sidekick phones have lost most of the personal information stored on remote servers manned by Microsoft (MSFT). The servers were based on Sun’s (JAVA) Solaris/Linux/Oracle (ORCL) technology.

Several versions of the phone were sold through service provider T-Mobile, which is a part of Deutsche Telekom AG (DT). T-Mobile has offered customers a $20 refund toward one month of data usage on the phone and an additional $100 through a customer appreciation card, which can be used for T-Mobile products and services, or for payment of a T-Mobile bill.

Customers have expressed outrage at the prospect of compensation, which was largely deemed to be insufficient. This was made worse by T-Mobile’s announcement that it would require another two weeks to send out details regarding the $100 claim. T-Mobile has also announced that it would probably be able to retrieve information relating to a majority of customers through a backup system.

Since the $100 compensation is being offered to only those customers whose data was irretrievably lost, the company could be delaying the process until these users can be identified. However, there is a real danger of losing loyal customers in the process. Microsoft seems to have got its fingers burnt.

The Sidekick phones are manufactured by Danger, Inc., which Microsoft acquired last year. The acquisition was intended to speed up its entry into the smart phone market, where several players such as Apple (AAPL), Research In Motion (RIMM) and Nokia (NOK) are already firmly entrenched.

The company intends to replace Danger technology with its own, but is currently bound by a contractual obligation to T-Mobile. The fiasco brings forward the possible danger of using the cloud for data without allowing for adequate local backup.

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