Cloud Storage and Cost Reduction

In the cloud storage business, we seem to talk a lot about “price wars.” So about every 6 months, a major cloud storage provider will lower their prices, and then everyone else will follow suit. Well, the game is over.


If you have not heard, Google has dropped its cost to $0.026/GB per month for a standard storage package (GCS) and $0.020/GB per month for a DRA (Durable Reduced Availability) package. There is obviously still more price drops to be expected, but basically we have finally reached the point at which cloud storage has finally been commoditized.

Cost Reduction and Cloud Storage

So, you may be wondering about what impact there is to the market and to cloud storage customers.

The truth about the commoditization of cloud storage was assured. The true value of cloud storage is basically in the software that is controlling it, like the cloud-integrated storage controller or the cloud storage gateway. It is the software that allows companies to solve their challenging storage issues: like growing and managing their current NAS and SAN systems, or preventing sprawl to having a disaster plan as well as a recovery plan so that it meets their objectives.

Price drops really should be no big surprise to anyone that is already in the realm of cloud storage. Actually, they are an important part of the value proposition. When you are purchasing traditional storage, you most likely will buy enough storage for the next 3-5 years at today’s prices, knowing that these prices will be quite a bit lower when you finally use all of the storage.

Cloud Storage

Also you know that there are no rebates or credits for any unused storage or delayed deployment. With cloud storage, you will pay for what you use and when the prices drop, not only does your next allotment of storage cost less, but your existing operational costs will drop as well. This is a very compelling concept in the world of traditional storage that is dominated by the 3-5 year replacement cycles that keep economic inefficiencies going.

As far as the market impact is concerned, there will always be winners and losers with any price war. Freedom to choose is a very powerful idea. We want to make sure that despite the outcome of any price wars, the customer will always win.

So enjoy the better economics of the new technology of cloud storage. And take comfort in the fact that this certainly will not be the last price drop.

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