How long until a 'free and infinite' cloud?

Aaron Levie, CEO of Box, predicts "a future where storage is free and infinite." Just what’s led to this startling forecast?

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Intel Corp. co-founder Gordon E. Moore’s famous law states that the number of transistors in an integrated circuit doubles about every two years. It’s why the smartphone in our pocket today is more powerful than the PC we used yesterday.

Well, something similar may be happening to cloud storage, according to an article this month by Julie Bort in Business Insider.

Bort calls the phenomenon, as it relates to cloud storage, "the race to zero."

Race to Zero

What Bort is talking about is the rampant price-cutting of cloud services coupled with an increase in storage limits. At one point in the future, she speculates, the graphs will collide, providing infinite storage at no cost.

Bort explains that the reason for the free fall is competition, and she says that it’s partly due to computer storage getting cheaper. She cites a Wired article that said a gigabyte’s storage on a hard drive in 1993 cost more than $9,000. It cost four cents in 2013.

Amazon

But she says it's Amazon’s price cutting that has really impacted the overall market pricing for cloud. Amazon has had 44 price cuts in six to seven years, Andy Jassy said at the Fortune Brainstorm Tech conference in July. Jassy, who’s been head of Amazon Web Services since it started, was interviewed by Adam Lashinsky, of Fortune, at the event.

Jassy said that "lots and lots" of users' bills are less than a dollar a month.

Other reasons for the overall price cutting include massive investments by Microsoft, Google, and Amazon that have led to a glut.

Add-ons

Cloud suppliers are understandably concerned and are looking for differentiators for themselves as prices drop.

It’s a bit like how gas stations try to differentiate themselves with a guy to check your oil, cleaner forecourts, or imaginary super-duper, adjective-laden, additives in the gas. The stuff’s all the same.

Alex Wilhelm pointed out in a TechCrunch article that cloud providers are building apps now too, specifically for their storage, so they have a differentiator when the “price of storage itself finally reaches nil,” he says.

Cloud suppliers are also keenly trying to come up with ways to make themselves more attractive—to everyone.

Brandon Butler, who’s covering AWS’s third annual conference for Network World today, talks of AWS’s new thrust into hybrid cloud, where storage in data centers can be run alongside cloud.

Others already offer hybrid solutions.

AWS is also actively encouraging third-party app development and add-ons, like those related to security.

Penny pinching

Bort wrote in another article that it’s Amazon’s frugality, really, that has helped these price cuts. She points out that Amazon saves on costs by building servers and routers itself. It also doesn’t return computer hard drives when they fail, which lets it negotiate better prices from drive vendors.

Round-up

Sounds good? Well, it isn’t all unlimited and free yet. For perspective, here’s where we’re at right now, with some simple, office-oriented business services from major players:

Google Drive for Work: Unlimited. $10 per user per month for accounts with more than five users. Accounts with fewer than five users get 1TB of storage per user.

Amazon AWS: S3 (Simple Storage Service): 5GB storage with 20,000 Get requests and 2,000 Put requests is free. Amazon Glacier: archiving at $0.01 per GB.

Microsoft One Drive: 15GB free. Office 365 comes with 1 TB of storage. Microsoft One Drive for Business provides 1TB for $5 per user per month.

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