Cloud storage: Price wars ahead?

Many services will provide you or your business with a few gigabytes of free cloud storage. But Google, with its Chromebook Pixel and its three years of a free terabyte of Google Drive cloud storage, may be setting off a price war.
Written by Steven Vaughan-Nichols, Senior Contributing Editor

Who doesn't like free cloud storage? Many of us use Dropbox every day. Others build their businesses around Box's OneCloud services. And still others hunt eternally for the most storage for free, which, for the moment, would be Mega's 50 gigabytes.

But now, Google with its new Chromebook Pixel, has upped the ante. This new cloud-based laptop comes with a terabyte of free storage for three years.

With Google "giving" away a Terabyte of storage with the Chromebox Pixel, we may be entering a new era of cloud storage price wars.

The one thing most people know about the Chrome OS-powered Chromebook Pixel is that it costs a whopping $1,299 for the Wi-Fi only version. That's $850 more than the next most expensive Chromebook, the Samsung S 550. What few people know is that the Pixel also comes with with a terabyte of free Google Drive cloud storage for three years. Normally, that would cost you $49.99 a month.

So with a little basic math, we can see that's a value of $1,800. Or, in other words, you would actually pay around $500 more for those three years for that same storage if you didn't buy a Pixel. Hmmm...

Obviously not everyone needs a terabyte of cloud storage to call their own; but if you do, it's a great deal. This leads me to wonder if other companies will follow Google's lead. Apple, for example, clearly wants you to use its iCloud not just for storage but for services as well. Microsoft, faced with the failure of Windows 8, is turning more and more to the marriage of Office Web Apps and its cloud-storage service, SkyDrive and other cloud-based services such as Office 365 for profits.

What do Apple and Microsoft lack? Anything close to Google's low-cost storage offers. SkyDrive comes with 7GBs of free storage and iCloud with only 5GBs. That was fine in its day, but now Google has upped the ante.

As we shift from a fat-client PC-centric computing world to one that's increasingly based on cloud services and storage, I see free and low-cost cloud storage options becoming a more important sales point.

It's not just storage for individual users either. Amazon just cut its EC2 instance pricing again by as much as 27 percent. This comes on the heels of cloud storage cuts by Amazon and Google in November;  Microsoft cutting its Azure storage pricing in December; Rackspace slicing its  storage price-tags in February -- and on and on. We're already in the middle of a corporate cloud-storage price war. 

Here's how I see it playing out: First, for business storage, the war is going to go on for months more to come. It really is a race to the bottom. I don't see it stabilizing until mid-year.

Next, for personal storage, we were already seeing multiple services dueling for your cloud-storage dollars. Now, I see the battle moving to a new phase. I see Apple, Google, and Microsoft all offering more and more storage with their devices -- the iPad, Chromebook, and Surface Pro and Surface RT, respectively. I see Microsoft, which is in dire need of a boost to its Surface hardware line, making the next move; and then the others will follow.

For users, of course, this all means good times ahead. Whether you need terabytes for your servers or "just" a terabyte for your own needs, you'll soon be getting both for unbelievably low prices.

At the same time, this is going to kill some, if not most, of the smaller cloud storage companies. Apple, Google, and Microsoft can all afford to cut their cloud storage prices to the bone. Smaller companies can't. The cold math of business will kill some of the players within the year.

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