The Race To Zero Is Awesome

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It’s Sunday, so let’s stretch our legs a little bit. Earlier today Julie Bort of Business Insider wrote an interesting piece detailing the rapidly approaching end game of the storage wars: The prices consumers and businesses pay for cloud storage are racing to zero, and that’s forcing new jockeying inside the crowded industry.

It’s a trend that’s been underway since Google ripped the cap off the email market by offering a gigabyte of storage in Gmail. Now, cloud providers Box and Dropbox offer their business customers unlimited storage. Microsoft does that as well, extending the offer to its lower-paying consumer subscribers.

And the amount of storage offered to consumers that pay nothing continues to rise inexorably. Anyone can see where those two lines cross — eventually cloud storage of any needed size will come stapled to business and consumer accounts, provided by large cloud companies that are incentivized to grow their lock-in among developers and users. It will be part of the cost of just showing up.

That’s easy enough. Let’s go one step further: Cloud computing power will eventually become free for most, or so ubiquitously cheap that its price won’t be far from zero. Current free tiers on Amazon’s AWS, and Microsoft’s Azure cloud computing platforms are equivalent to the free gigabyte in Gmail, if you will. And the price of compute is skyrocketing downwards.

The large cloud players — Microsoft recently name-checked Google and Amazon as its only competition at scale in the space — are pouring billions into their cloud platforms, building out capacity around the world. Who knows if they are building too much, but they certainly track usage, and prices are falling. And if you want to see increasing usage while prices decline, well, I’d suspect it creates even more negative price pressure due to the competitive landscape; everyone is pulling on the same levers.

In cloud storage, the large players are working to build apps on top of their storage stack, so that they can have a unique value proposition when the price of storage itself finally reaches nil. In cloud computing, it could be that the value add that the large players will use to compete will be their app environment. If you build for, say, Google’s app ecosystem, your cloud compute might be free. If Google’s app ecosystem is the best, you’ll want to work over there, but you wouldn’t if Google didn’t offer competitively priced cloud computing; smaller players could use that to their advantage, and potentially hem in on Google’s business.

So compute prices would be pretty uniform across the industry, falling in near unison. That is, of course, precisely what we have seen with cloud storage prices.

I’m not going to say any of this will happen by any certain date, but as the major platforms continue to distinguish and define themselves, the cost of compute keeps falling, and the competition for developer attention only increases, offering more value on the services end will be a weapon available to all.

The race to zero is awesome.

Featured Image: Robert Scoble/Flickr UNDER A CC BY 2.0 LICENSE (IMAGE HAS BEEN MODIFIED)