Box.Net (see previous CloudAve coverage), the Palo Alto based cloud storage company, today surprised the industry with their Infinite Cloud philosophy. With this move, Box.Net is changing the very dynamics of the industry. We will be seeing the reverberations of this move in the coming months and years. Whether Box.Net can truly disrupt the industry or not is still unknown but this move will definitely start a pricing war which may end up benefitting the users in a big way and transforming the industry upside down.
The Problem
Even though the costs of storage are coming down at a faster rate, cloud storage providers are very slow to react or didn’t bother to react or didn’t want to react (depending on your political perceptions). There was no visible market pressure to push the industry towards complete commoditization of storage. Yes, there were some vendors who jumped in with unlimited storage offerings targeted towards individuals and small businesses but none of them took off because of the lack of trust with the newer vendors, concerns about longevity of these vendors and, for many, the price was considered too good to be true.
The plans offered by some of the established startups were not attractive enough to lure large number of organizations into the cloud storage. Many individuals and small businesses found the “on-premise storage” to be more cost effective than cloud storage. For example, the cost of 250 GB of storage with a typical vendor is $250 per year and an individual or small business can buy 5-6 500 GB hard disks for the same price and establish both mobility options and geographical redundancy. Clearly, cloud was not offering the kind of cost savings that will encourage such users to jump in.
Box.Net moves in to change this
Today Box.Net took a bold step towards disrupting the industry by offering what they call as Infinite Cloud. Well, neither all their plans are unlimited nor they can actually offer truly unlimited storage but their offering is so generous for the price point that you will never feel that you are running short of storage. They have changed their offerings as follows:
- Personal Plan: The free personal plan which offered 2 GB of storage has been bumped up to 5 GB
- Business Plan: The business plan, mainly targeted at SMBs, which offered 15GB for each user now starts with 500 GB
- Enterprise Plan: The enterprise plan is supposedly unlimited. However, there is no pricing info about enterprise plan on their website and I guess they will price it differently for each enterprise based on factors like the number of users and few other factors
All the new users will see these storage enhancements immediately and they will be rolling out these enhancements to existing users over the month of November.
Conclusion
The cost of storage has come down drastically and there is no reason for the cloud storage providers to continue with their existing pricing model. Clearly, it is not cost effective for both individual customers and small businesses. Even though Box.Net has nothing to offer for individual customers, this move has the potential to put pressure on other providers catering to SMBs to reduce prices. I see this as a beginning of a trend where the storage will be infinite and the differentiation will happen at a different level. Box.Net is trying to achieve this differentiation by being the “Sharepoint of the Cloud”. This price war will definitely burn down many of the startups in this space but it is inevitable and only the innovators will survive the brutal game.
Related articles
- Box.net Ups Its Cloud Storage Offerings (mashable.com)
- Box.net Upgrades Personal And Business Data Plans To Include More Storage In The Cloud (techcrunch.com)
- Box.net Increases Storage in Its Content-management Cloud (pcworld.com)
- Box.net increases storage quotas for both free and paid plans (downloadsquad.com)
- Box.net Bumps Free Storage to 5GB, Business to 500GB and Unlimited for Enterprise (techie-buzz.com)
- Box.net bumps free, paid storage capacities (news.cnet.com)
I have a Box.net “Pro” subscription, for which I pay $20 a month. It entitles me to 15GB of storage. I’m hoping Box will grandfather me in and let me enjoy 500GB of storage while continuing to pay just $20 as a single user. Does anyone know? I can’t believe they’d squeeze me out, forcing me to choose between a too-small free plan and too-rich-for-my-blood business account.
If you currently have a pro account, your storage will be upgraded to 50GB free of charge. This should happen by the end of November – we’re currently migrating all of our accounts to the new storage allocations. If you don’t see this upgrade, feel free to email me directly at mark@box.net, I’ll be sure you’re taken care of. Thanks for using Box!
Mark
with bigger disk capacity every year, the economics changes in favor of online storage company, cheaper & larger disk means less servers -> less space -> less power -> less hosting fee = much lower cost.
[...] aggressively priced and I expect them to reduce the price sometime soon because Box.net has already set a standard on how low the pricing can go down. The cloud storage space is too crowded and we will soon see a [...]