The real innovation of Internet of Things (IoT) can be spurred only when being combined with cloud computing, a paradigm that allows numerous users to simultaneously access configurable resources and services. However, serious vulnerability concerns have arisen from the virtual machine co-resident architecture of the IoT cloud. Specifically, co-resident attacks can be launched, where an attacker can access and corrupt a user's sensitive data/software by co-locating their virtual machines on the same physical server. Various solutions have been suggested in literature to mitigate negative effects of the co-resident attacks in the cloud environment. However, to the best of our knowledge no work has been performed for studying co-resident attacks in cloud systems with N-version programming (NVP), a popular redundancy technique for enhancing survivability of critical cloud service components. This paper makes original contributions by modeling IoT cloud system services implementing the NVP component redundancy, and evaluating the corruption probability of the NVP service component. Further, users’ policies on choosing the optimal number of service component versions are investigated through formulating and solving a new set of optimization problems with the objective to minimize the expected cost of losses of a cloud service provider. As demonstrated through examples, these policies can effectively help defend the NVP service component against the co-resident attacks in the cloud system.