In 2007-08, two years after its acquisition of StorageTek, when Sun Microsystems was introducing solid state drives, a clever mantra was being echoed within the executive meeting rooms: storage is free. Having lived through a world in which Java was free, at that time I wasn’t sure how to feel about another Sun offering being “free” – until someone in the know filled me in.
The point being made was this: over three decades the cost of storing data had dropped so dramatically through each technological advance that, for all intents and purposes, the marginal cost of adding a few gigabytes here or terabytes there was nil. Examining the numbers – and particularly the rapidly declining cost/unit of storage curve on the graphs I was shown – made the case. I was a convert.
Yet wait!
How we were going to make money being in the business of selling stuff with rapidly descending price curves gnawed at me. Sun was already grappling with declining revenue as a result of a sharp – and rapid – drop in server prices.
In the mid-nineties the powerful E10K server which, at a nice $250K a unit, took off and became responsible for much of the company’s success in the heyday of the dot-com boom had, within a few short years, been replaced by more powerful servers which could be purchased for a mere $25K. To put this in perspective, a sales person had to sell 10 of these new servers to make about the same commission as was earned on the sale of one E10K just a few years earlier. Such a feat works in a buoyantly elastic market (one in which a decrease in price is more than offset by an increase in quantities purchased so that total revenue does not decline). Sun was not in an elastic market. The rest you know.
Which brings me back to the price of storage, and Google’s announcement of pricing cuts for its Drive storage. Here they are:
- 15 GB – free
- 100 GB – drops from $4.99/month to $1.99/month
- 1 TB – drops from $49.99/month to $9.99/month
- 10 TB – a paltry $99.99/month
To put these prices in perspective, a very good 2TB external backup drive can be purchased for $100. When faster drive and port speeds, RAID, mirroring, and other goodies are added the price bumps up to about $75 – $100 per TB, depending on the goodies. It’s still a lot better than just a few years ago. The downsides: storage you own can break, and there is still the matter of sharing files among co-workers and collaborators.
I very much doubt that being in the Storage business one of Google’s end game. Though other vendors – DropBox, Box and Microsoft – offer similar services as well, I doubt that their long term vision is to be a dominant storage player.
The move is increasingly towards what began with SaaS (Software as a Service) several years back. We find ourselves in a world where computing in the main is becoming a service utility. Processing power, software, storage, media and networking assets are shifting from the home and office to big players who are able to provide the latest and greatest – without the headaches – on a subscription basis.
I have not purchased a Blu-ray or DVD disc in perhaps three years, and cannot remember the last time I used the Blu-ray player. In our home everything is now streamed. We pay for what we want when we want it, no longer cluttering shelves or having to wrestle with security packaging to get out the discs.
It is becoming the same with computing. With a device to input, network and receive data, and sufficient processing power to manage and execute program components locally, there is little reason to have a mini data center – for personal or business use.
This is the end game that Google and, rest assured, its competitors are envisioning. And making offerings to woo its share of service subscribers.
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