Cloud Storage Pricing – Where’s the Bottom?

• Posted by Chris Selland
• on December 8th, 2009

Interesting news today from Amazon ($AMZN) that they are dropping pricing 15-50+% on their S3 hosted storage services.

This follows a recent ~90% price drop by Google ($GOOG) for their own cloud storage services.   Unlike Amazon S3, Google doesn’t (yet) offer general purpose storage (Google’s storage offering at present supports only Gmail and Picasa photo storage) but a ‘Gdrive’ general purpose storage offering has been rumored for quite some time.

While terrific news for customers, these announcements by the industry’s goliaths raise questions about what happens to smaller competitors such as Rackspace ($RAX) and Terremark ($TMRK).  These more focused storage and hosting providers will even more need to continue to innovate on service and features, but at some point will undoubtedly be forced to adapt their pricing strategies in kind – which as ‘pure plays’ do not look like positive trends for their revenue or margins.

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