A Penny for your Gig
by David Merrill on Sep 10, 2012
You may have seen this recent announcement from Amazon on their new Amazon Glacier Storage Service. This is a red-letter day in the annals of
cloud storage service offerings in that a very low cost offer can be priced at $.01 per GB month. That’s 12 cents for 1 GB for an entire year or $120 USD per TB for a year.
Achieving the 1¢ price-point is much like breaking the 4-minute mile in running. This sets a new precedent and some new pricing standards in the future.
I recently came across an article trying to diffuse this offering as one that will not destroy tape. You can bet that this new price point will generate a lot of comparisons and contrasts. A new low-price gauntlet has been thrown down, and there will be a fair amount of effort to mimic or diffuse the offering.
But a singular or myopic view on low-price can lead to confusion and oversight on the total cost of a low-cost option. There are limitations and caveats to be sure–the on-boarding and retrieval costs, for example. Performance delivered with this kind of service has to be aligned with the price as well. I have often talked about price not being equal to cost, and that we have to remember that the price of disk is approaching zero. The Glacier offering is proving that prediction to be true.
New levels of confusion about price and cost are bound to crop up with this new service-price offer from Amazon.
I will take my own stab at normalizing this price to a longer term cost perspective in the next few blogs. By creating a few different scenarios (SM, MED, LG), we can start to see the total cost implication of a low-price solution.
I am very excited to see the market acceptance of this offering, and for competitive solutions coming to the market over time. Once this 1¢ barrier has been broken, others will soon follow. With a clear understanding and construction of the total costs, consumers won’t be as easily seduced or confounded by an incredible new price.
Comments (1)
tony bebie on 13 Sep 2012 at 12:38 pm
Dave,
What do you see this type of offering used for? Is this a play for archive data or backup? If so, what type of tradeoff is there for using it? What I’m trying to understand is how are customers planning to use cloud.
The price is so low because of multi tenancy and the infrastructure costs spread over a number of customers. What happens if you need to introduce workload to it like a catastrophic restoration or analyzing the data?—I struggle with the whole cloud concept when it gets beyond the SMB market where it is restrictive to purchase assets, but at the same time not data intensive/performance demanding as the enterprise. –Am I missing something?
