On Wednesday, the Google Cloud Platform offered two terabytes of annual online storage to businesses for free.

The free object store service is available to users of a newly free cloud gateway virtual appliance from Google partner Panzura. To be completely free, without charges by Panzura, the storage can only be accessed from one location.

This tops Amazon Web Services’ $120 per year for one terabyte of seldom-used data, or Microsoft Azure’s pennies-per-month for each gigabyte in the first terabyte. Free online storage from such providers as Box and Dropbox are in the gigabytes, and are more oriented toward individual users.

“We want to make sure potential customers are not worried about cost as a barrier to entry,” Google Cloud Platform executive Chris Rimer told The Wall Street Journal.

“These vendors don’t want to make their money on storage,” Forrester Research senior analyst Henry Baltazar told VentureBeat.

“They want to sell compute, analytics, security, collaboration, developer services, et cetera to customers,” he said, pointing out that such add-on services are high margin. None of the main online storage “players have a legacy enterprise array business to protect,” he said.

Long term, Baltazar noted, large amounts of free storage is not a working model unless you are “a huge company with resources, [and] have something high margin to sell after a customer has used your cloud for storage.”

Loss leader, plus lock

In a very direct way, massive amounts of free online storage are a loss leader with a virtual lock attached.

“While it’s easy to move data into a cloud” because there are no import fees, Baltazar told us, “it is expensive to pull data out or push it to another cloud. In the vast majority of cases, providers have a solid lock-in on customers.”

Consumer as well as business customers. Many wireless services, for instance, are increasingly offering free online storage in the gigabytes under the same principle: It’s harder to move if much of your stuff is in the service’s drawers somewhere out there.

With so many free services these days, will free, unlimited online storage from huge companies become one of them?

It won’t “become the norm anytime soon,” Baltazar said.

While free cloud service is a lure to encourage use of other high-margin services and to discourage cloud-hopping, he said, it generally offers only object storage for storing unstructured data and basic file storage.

“You do have to pay for high performance application storage” such as Amazon Elastic Block Storage, Baltazar pointed out.


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