Cloud Price Wars

Near the end of November, Google announced a large price cut for their cloud storage service. Two days later, Amazon countered with a price drop of their own. Not to be outdone, Google announced yet another price cut the next day. Microsoft decided they wanted in on the action a week later.

This all sounds like it should translate into big wins for consumers, since services like Dropbox, Google Drive, and SkyDrive are built on top of these storage systems. Little talked about, however, is the fact that these price cuts only affect the introductory rates — the rates that companies like Dropbox pay for cloud storage remain untouched.

This price war is real, but as Sun Tzu wrote, centuries ago:

All war is deception

We’ve written before about the growing gap between what it costs to buy a hard drive and what it costs to put a hard drive in the cloud. Even with the cutthroat price wars going on between the biggest companies in cloud storage, this trend marches on unabated:

Some of the brightest minds in the industry are working to reduce datacenter costs, driven by these companies’ relentless competitive nature to win the cloud storage market. Yet as the above graph shows, the gap between what it costs them and what it costs Space Monkey grows every month.

As a Space Monkey user, that’s good news for you; cheaper storage doesn’t only mean you pay less, it means you can store more of your stuff.

As for the traditional cloud? Maybe it’s time to do some studying on alternate strategies.

Originally published on December 10th, 2012 by @alenp