A while ago I wrote that metered billing will kill the online storage. Looks like Mozy just demonstrated how this will happen.
Except in this case there’s no telecom or cable company executive, that experienced a sudden refreshing thought of implementing “small cap for the same price a month + large over-use fee”, it’s the guys at the online backup.
I bet it also has something to do with EMC Corporation’s purchase of Mozy too, because such sudden round-about (including ambush of current customers) is a bit unexpected.
What used to be unlimited (well, almost, as users actually complained about bandwidth throttling) now suddenly turned into a $6 a month for 50Gb plan. Extra computers are $2 a month (wait, if you are paying per gigabyte stored, why do you need extra $2?), 125Gb is $10 a month (for 3 computers).
Sounds not that bad. Except some users actually did buy that mantra about unlimited storage, and uploaded tons of data. Faced with not extra rosy profits, bosses decided to cut down those “storage hogs”.
My first thought was “this can’t be right”. I mean EMC Storage is a cloud storage company, for goodness’ sake! It can have way better prices. Look at it this way — if user decided to just go with Amazon’s AWS 99.99% durability cloud storage, it would cost about the same.
50GB = $4.65 for storage + 10c per gig for upload (given that you can’t upload more than 50G that $5 would be stretched over time), throw in a dollar for put/get requests. And that’s basically retail, with Amazon not loosing any money on it and having roughly 50% margin.
Hardware-wise 2TB costs $90. So one year of $9.99 a month means a new hard drive, just for that “storage hog”. Bandwidth costs for the company would be negligible. Yes, there will be server costs, maintenance, facility and so on, except the more customers you have, the lower per-customer cost you get. Scaring people away is not going to make things better, just rebalances fixed vs usage costs.
But the desire to make money and 50%+ margin is not the worst sin that Mozy committed. They abandoned current users. Worse, they ambushed them. Given the state of broadband in the US, users spent considerable amount of time uploading data. And now they are presented with a statement akin to “okay, cheap time is over, now fork over serious money or this back up gets it”. Can you imagine paying for huge storage for a while, spending several months dragging your old possessions there and then getting informed that “the next month price becomes per square foot”.
After that, I’m not even sure any sensible person should continue to use Mozy even if they are okay with paying more. Because can you honestly say that there won’t be “whoops, we’re cutting your storage allotment to 10GB from 50GB” announcement in August? I suppose “monthly” users are basically “asking for it”.
But anyways, finishing up this rant I can say only this:
– while there are providers that still have unlimited (or nearly unlimited, certainly more than 120Gb for $10 a month) users will migrate away (Crashplan
with unlimited backup plans for less, Nomadesk, Jungledisk for pay-by-byte crowd)
– when changing price on something that requires users many months to switch, apologize, give long advanced notice (3-6 months), rise prices gradually. While you probably will loose a couple months worth of “extra” charges, users won’t feel betrayed
– if users that store 500+GB on your system upset you from financial point of view, start by setting limit to that amount. Arbitrarily lowering it just adds to the strong sense of marketing BS (and no, I don’t think 50Gb was really the limit when initial estimation was done for Mozy’s online systems)
– don’t try to cover users in marketing BS. While data requirements do grow (more megapixels, larger video files), hardware gets cheaper quickly. Users know it, they have stores nearby, otherwise price of that 2Tb hard drive would be a few thousand bucks.
See? Easy. And that would avoid this whole PR disaster for Mozy and win for Crashplan (they even offered a discount to switchers). Unless, of course, EMC buys up Crashplan too, and forces them to crank up prices like there’s no tomorrow…