Google Passes On Storage Savings to Users

Hardware is one thing; software is another. If there are any future wrenches in Google’s strategy, it could be on the software side. IDC storage software analyst Bill North says that software is catching up with hardware as the primary cost of storage. “We’re on the verge of a complexity crisis.”

The e-mail storage war between Google, Yahoo and MSN confirms that competition continues to create better user experiences on the Web. It also shows that storage capacity simply is getting cheaper.

Last week, Google said it would double the amount of e-mail storage it offers through its Gmail service to two gigabytes. A year ago, Google unceremoniously dashed Yahoo’s and MSN’s e-mail storage revenue-generating services by offering a gigabyte of free storage. Both rivals were forced to keep pace with huge increases of free storage for users.

Warning Messages

Google says it wants to make e-mail storage a moot issue. By offering enough free e-mail storage space to users so they do not have to worry about reaching limits, the company has eliminated the premium Yahoo and MSN could have charged for their own add-on storage services.

Before Google announced its Gmail strategy a year ago, Yahoo and MSN users had become familiar with warning messages from the companies when they reached their e-mail storage limits. Yahoo tacked on a fee to users who wanted more than 4 megabytes and MSN charged for providing more than 2 megs.

By doubling capacity to 2 gigabytes, Google is able to claim leadership in a category that technology has radically changed.

Complexity Crisis

Simple storage is crashing, in terms of pricing. Where once a megabyte of storage cost about a dollar in the mid-1990s, the cost for a gigabyte has fallen into the same region. “The cost of storage is declining while capacity growth is going up faster,” said IDC storage software analyst Bill North.

It’s likely that Google, Yahoo and MSN will be able to offer more capacity to their users. “They can do that because the costs continue to drop,” North added.

Hardware is one thing; software is another. If there are any future wrenches in Google’s strategy, it could be on the software side. North says that software is catching up with hardware  as the primary cost of storage. “We’re on the verge of a complexity crisis,” he noted.

At some point, Google may have to manage all that e-mail in more granular ways. That actually could present on opportunity. Google may want to do more than give users an e-mail parking space. It could offer them more sophisticated storage services — for a fee, of course.

Posted by on April 4, 2005