Category Archives: SpiderOak

Industry Dynamics of Online Storage and the Decade Ahead

Guest Post by Eric Greenwood

Eric Greenwood is a technophile whose interests have led him to study all things related to the cloud computing movement from online storage to software as a service. Get more tips and advice on his Cloud Computing blog.

Online, or cloud storage, is a massively growing industry, already poised to change the way we use our computers. By 2016, consumers are predicted to be spending as much $16 billion on cloud storage annually.

Big names are flying into the cloud. Oracle and Hewlett Packard are rushing to sell cloud computing tools; Amazon’s cloud services division has earned an estimated $750 million from cloud services in 2011 – and predictions are for earnings of $2.5 billion by 2014 from all cloud services including their Simple Storage Service. Amazon CEO Jeff Bezos suggests potential for Amazon Web Services could surge to match that of its retail earnings, which last year topped $25 billion. Rackspace’s cloud servicing is also surging.

While currently only approximately 10% of global spending IT goes to cloud computing, the shift to cloud storage is a growing trend and market.

Popular cloud storage service Dropbox already has over fifty million users, and $250 million in venture capital; and Google Drive’s new online storage is poised to rival them. Like Dropbox’s chief competitor, Sugar Sync, Drive offers 5 GB of free storage, over doubling the free storage amount provided by Dropbox.

Storage competitors are also likely to follow Dropbox’s option of gallery pages that allow users who follow a link to see photos, presentations and videos without downloading each individual file. Dropbox is valued at approximately $4 billion, currently. The company’s CEO recently turned down a reported nine-figure offer from Apple. Apple of course maintains its own online storage system, iCloud, free to all users of iOs5. iCloud’s seamless interface with Apple products keeps this cloud storage service somewhat above the competitive fray.

Dropbox was recently voted “startup of the year,” and is reportedly the fifth most valuable web start-up, globally. But along with iCloud, SugarSync, and Google’s new drive, competition is fierce from other online storage startups ranging from, now known simply as Box, to Microsoft’s massive SkyDrive, Carbonite, which offers solid data backup services, and SpiderOak, which offers data encryption. Each of these cloud storage companies have greatly benefitted from the decline in pricing for online storage. Clearwell Systems research estimates that the storage cost for 1 gigabyte of information that cost $20 in 2000 is now approximately ten cents. HTML 5 has also greatly accelerated the growth of cloud storage companies. The cost and technology trends that have made cloud computing expand will only accelerate over the next ten years.

Dropbox’s popular rival SugarSync is an outgrowth of Sharpcast, the 2006 creator behind Sharpcast Photos, utilized for synching photo images to multiple devices. SugarSync’s differentiation with its competitors is based on its use of an automated refreshing process which means users don’t need to update their own synced files.

Microsoft’s recent overhaul of its SkyDrive online storage has doubled the storage file limit size, and made sharing as well as file management simpler for users. Just last month, Microsoft released a desktop app for SkyDrive, and allows direct file sharing to Twitter.

On the downside, there may only be a finite amount of users willing to store their data in the cloud, and a lot of competitors vying for a slice of the same pie. What’s good for consumers in terms of free storage or service perks may be difficult to sustain an entire industry of cloud storage competitors. Consolidation of some companies may be necessary.

A recent cautionary note was also founded when the file storage and hosting business Megapuload in Hong Kong was shut down by the U.S. Justice department for assisting in the violation of U.S. copyrights due to the ability of users to upload copyrighted material and distribute a link to it.

Megaupload’s violations bring up a key point in cloud storage, leading to the question as to whether or not Microsoft, Google, Dropbox, and all their competitors must scan files for copyright violations. Should this occur, the market will likely improve for Google with its Content ID already in place. Privacy and trust issues are also key in cloud storage growth. The only online storage company that claims to be unable to view users’ stored data is SpiderOak.

Online storage may be still in a speculative stage, but with data volumes predicted to multiply over forty times by the year 2020, data storage in one form or another is not only here to stay, it’s here to grow. Publicly traded companies such as EMC Corporation, NetApp, Isilon, Amazon, and CSC are providing expanded cloud storage options, and growing in financial leaps and bounds. IBM is working on a cloud system that can create virtual machines, able to integrate data without the costs of standard IT development, and simplifying cloud resources.

Complete data management through the cloud is clearly coming in the near future. Personal computer users and businesses multi-national to mom and pop size, must address data storage. Cloud storage is the go-to storage of the future, protected from human error, disasters, theft, and hardware malfunctions.