The sudden shutdown of Nirvanix, an early but recently faltering participant in the “pure-play” Online Storage space dominated by the likes of AWS S3, Microsoft Azure and Google, is in large part a result of downward pressure on prices as the big players continually lower theirs. Amazon, for instance, launched S3 in 2006 and charged $0.15 per gigabyte-month. After many step-wise price cuts S3 is down to $0.095 per gigabyte-month.
Pure online storage is fast becoming the sole province of vendors who either enjoy economies of scale, or who treat their offerings as a loss-leader to get other business (or a combination of both).
Smaller players may have to add value in other ways to survive. Nirvanix was not profitable, and when their latest round of funding came up short it was the last nail in their coffin.