When Apple introduced iTools (which later became .Mac and finally MobileMe), the package included an option to back up files to your online iDisk. Apple's Backup utility could transfer user-defined batches of files to the iDisk as well as to local drives and optical discs. Backing up data online so you could access files from anywhere was appealing; however, the option of automatic backups to online storage has never really taken off. One big reason for this is Apple's backup option for OS X has switched from Backup and similar utilities to Time Machine, which is designed as a local backup option.
Time Machine so far has been a local backup system that will copy files either to a locally mounted hard drive or to a networked drive (usually in the same building). Keeping all of your data local can be risky if there's a major disaster or theft, however, so you may wish to have an online backup option as well.
Unfortunately, to date most online-disk backup options have had limitations that have kept them from working with Time Machine. For one, most online disk services, including MobileMe, don't have enough storage to use with Time Machine (Apple's iDisk is offered between 20GB and 60GB). In addition, Time Machine has some setup requirements that make it difficult to use with unsupported storage media. As a result of these limitations, online data backup has required the use of other backup tools than Time Machine.
Despite these limitations, however, there is a new service available called Dolly Drive that does allow you to pair Time Machine with online storage. Dolly Drive plugs into Time Machine and allows Time Machine to use the Dolly Drive cloud-based storage for your regular backups. The service offers between 50GB and 2,000GB of storage for between $5 and $55 per month, but in addition has a "reward" option that will increase the base storage amount by 5GB every month that you use the service. Therefore you only purchase the amount of storage that you currently need for your data, and as you use your system the amount of storage will increase to accommodate your growing data, in theory.
In addition to regularly increasing storage capacity, Dolly Drive's online storage is both encrypted and accessed through an encrypted connection to keep the backups safe. The service also has a high-throughput connection for users so there will be no bandwidth throttling by the hosted service.
Nevertheless, despite these perks, access to the service will depend on the speed and features of your ISP (Internet service provider). Even though broadband Internet connections have come a long way, upload speeds are still far slower than the transfer rates of hard drives or a local network connection. Furthermore, upload speeds on most ISPs are much lower than the download speed of the connection (for instance, a 10Mbps connection may have an upload speed of 1-2Mbps, which translates between one-eighth and one-quarter of a megabyte per second). Therefore, initial backups to the Dolly Drive cloud will likely take a very long time, and though incremental backups should be faster, the speed of the backup will depend on the size of the files being used. If you regularly edit or generate large amounts of data, then this may be an impractical approach to backing up your work flow, especially on a home broadband system.
In addition to the question of speed, your ISP may have service limitations that would affect your use of a massive online storage option. Some ISPs throttle bandwidth during certain "high-usage" times of the day, and also may limit overall monthly throughput or make you pay extra if the throughput limit is reached. This can result in slower access than expected, or require you to pay more for using the bandwidth, especially during the month in which you perform your initial backup upload to the Dolly Drive.
Regardless of these limitations, however, for some people the option to have backups online and still accessible through Time Machine's interface may be appealing because of its portability. Dolly Drive is the first service to bring Time Machine to the cloud, and as Internet connections get faster it and similar options may become more and more feasible for Mac users. Apple is currently rumored to be developing a number of cloud-based services, and it is possible that Time Machine may be one of them as well. We will have to wait and see how online backup develops at Apple, but until then if you have the connection to make use of it, Dolly Drive may be a good option to check out.