Uncommon Wisdom

Aug 8 2011   2:28PM GMT

Apple’s iCloud data storage costs — high and higher

Tom Nolle Tom Nolle Profile: Tom Nolle

Apple’s iCloud is advancing quickly to production status, and with the progress comes more clarity into what the service will offer. Three things about iCloud caught my eye; Windows integration, the pricing for data storage and the potential competition with Microsoft’s Live strategy.

I’ve noted in the past that one of the biggest issues in cloud computing adoption, and one that is virtually never mentioned, is the cost of storage. Standard storage pricing from market leaders in the space would put the cost of a terabyte of storage at more than $1,000 a year, which is more than 10 times the cost of buying a terabyte drive and 20 times the marginal cost per terabyte for many data center disk arrays. With typical installed lives of three years, internal storage is then closing in on being ONE PERCENT of the cloud cost. Apple’s iCloud pricing sets an even higher price. At $100 for 50GB, a terabyte would cost $2,000 a year.

It doesn’t take rocket science to see that we’re pricing cloud storage an order of magnitude or more beyond the equivalent cost in the data center, and many cloud services also charge for outbound delivery. The rates could double effective storage cost just by churning that terabyte once per month. Thus current cloud pricing policies would discourage the deployment of enterprise mission-critical apps by pushing storage costs way above any possible point of justification. We’re creating cloud computing for the masses, but not for masses of data.

The Windows connection with iCloud shows that Apple sees the service more like iTunes than like the App Store. iTunes is a profit center, and the App Store is a feature for iOS that helps build value for the devices it supports. iCloud is going to be a money-maker in itself, and that demands that Apple open a path to the largest installed base of PCs, which is Windows. But even this factoid demonstrates something interesting: Windows dominates PCs, not appliances, and so iCloud must have a strong value proposition for PCs as well as tablets and smartphones. It has to leverage local resources more, because on PCs there are more local resources to leverage.

Which brings me to Live. Microsoft has wanted Live to launch it into online success, but it’s never been able to create a compelling value proposition for Live given the resources available to Microsoft users on Windows and its application base. That’s in large part due to the fact that Microsoft was so worried about creating something that would take users away from Windows or Office that they forgot that Live had to do that to some degree to have any utility. They hunkered down on defense, and there’s only a small distinction between battlements designed to serve as a springboard for attack and those designed for your Last Stand.

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  • Mariodlg
    I think Apple's iCloud is not an storage service. You are not paying for hard disk space, you are paying for a new kind of service that needs hard disk space on the cloud. That is a big difference. Think about itunes music, you will never need to upload any mp3 file, only for the songs that are not in the music store, a very low posibility. Regards.
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