The Ongoing Cost of Cloud Storage

Ten Predictions for Cloud Storage in 2014

Time is money. It’s an old adage, but it still applies to everything from banking and high finance to hiring the neighbor’s kid to mow your lawn: The more time it takes, the higher the cost.

This is true for the cloud as well. The longer data volumes remain on third-party public resources, the greater the cost to the enterprise. The question is, at what point does reliance on the cloud start to exceed the cost of local infrastructure?

According to NetApp CTO Jay Kidd, not long. As he noted at a recent Wells Fargo gathering, archival storage at Google and Amazon runs about 2.5 cents per gigabyte per day, so within three months you are already pushing past the cost per gigabyte of an average disk drive. To be sure, the cost of local storage encompasses much more than just the drive, but for enterprises that have already borne the expense of infrastructure deployment, the economics of moving large amounts of data to the cloud starts to break down for anything but the most transient of applications. For large block volumes, the numbers are even less affordable—as high as $4 per gigabyte over a typical three-year hardware life cycle.

This might be part of the reason top cloud providers have been so eager to cut prices lately. Ostensibly, Google, Microsoft and others are looking to shave each other’s margins with reductions of 80 percent or more over the past few months. But it is equally likely that, with the focus shifting from consumer to enterprise-class services, top providers are angling for longer-term pricing models, which would have to be on par at least with the cost of traditional data center infrastructure. At the same time, low-cost competitors like Dropbox are adding higher-end services like collaboration and mobile commerce in a bid to make themselves more palatable to the enterprise executive suite.

Meanwhile, in Europe, smaller cloud providers are starting to team up in order to compete with their larger brethren on pricing. Through broad federation of infrastructure and services, companies like Britain’s OnApp and The Netherland’s Interxion are banking on the notion that enterprises will warm up to smaller, local providers rather than the hyperscale crowd through a combination of shared resources and the delivery of specialized services. One thing that Europe has going for it in this regard is stricter carrier neutrality rules, which make it easier for small providers to maintain connectivity services on an equal footing with larger organizations.

For cloud providers and enterprises alike, it is reasonable to expect storage costs to drop even further in the months and years ahead. Seagate’s new 6TB Enterprise Capacity 3.5 HDD v4 model, for example, is said to improve performance and capacity some 25 percent through increased areal density and 12 GB SAS connectivity. The drive is said to provide 1TB per square inch without employing advances like Shielded Magnetic Recording (SMR) or Helium-filled designs, and this should allow mechanical technology to maintain its cost advantage over Flash a while longer. The cost of the drive is said to be on par with earlier 4TB models, which places it at about $100 per terabyte.

Cloud storage has more to offer than just price, however. It also provides flexibility, ease of provisioning, the ability to accommodate new mobile and social platforms, and a range of other benefits. The choice will largely come down to the nature of the data and application workload.

But as enterprise executives weigh their storage options, it helps to understand that the longer storage and other services are occupied, the greater the cost will be.