I recently came across a video interview where the CEO of a ‘business solution’ online backup company was asked how an unlimited data storage plan is possibly profitable.
He came back talking about de-duplication and the fact that data was being stored on their servers rather than on the customer’s site. He then concluded by shrugging his shoulders and saying “The future is bright so give us all your data.”
For a start de-duplication is not a differentiating factor which other software is missing. Secondly the whole point of off-site backup is to get data offsite, so the second part of his answer did not make any sense. So what is the secret to companies offering unlimited storage?
The model which such companies use is that the few users which utilise a large amount of storage will be balanced out by those that use little storage.
The other part of the model which is talked about in the interview is economies of scale. The more customers which join the more storage costs fall.
So the short fall is that someone is going to place all your business data (an unlimited amount) on the cheapest hardware which they can get through bulk purchasing. Then hope that the law of averages work out so that other companies will not eat too far into their unlimited quota.
In this scenario profits rely on making hardly anything per customer but having millions of customers. However when you see this model failing for the likes of Mozy in the consumer market, it does not bode well for the business market. Mozy was one of the original pioneers in the space and unlimited storage is a great concept. However as people create an ever increasingly large digital footprint, it is simply unrealistic.
Tread carefully when considering an unlimited service, especially when it comes to protecting your business data.