The “Race to Zero” is a concept with multiple interpretations. One is reducing the amount of garbage that ends up as landfill to zero. Another is the elimination of carbon dioxide emissions. And more recently we have had a vision of free storage without volume caps.
The race towards free non-realtime accessible storage is on. We all have access to free picture storage, though capped at certain volumes. Parts of the cloud industry are now working towards a gradual transition from this model to free storage, their own “race to zero.” This future will be one of basic storage capabilities offered free without any volume caps.
Yet the cost of providing storage is not free. The cost of the actual storage hardware is low and falling quickly in line with Moore’s Law. But hardware is just a relatively small component of the total storage costs. The majority is in the all the surrounding cost to operate the storage hardware. The total cost for storage is not approaching zero, and the rationale for a zero price therefore need to be found elsewhere.
Business model transformation
Free storage is more a game about business model transformation. Something with a significant cost (storage) is offered free up front. Then something with no/low cost (software and services) is sold later as value-added services. This minimizes the number of players able to operate in the market, by increasing the barriers to entry. It also has the potential to create a strong lock-in effect, with customers getting the initial part of the offering for free, then paying premium prices for supplementary services once the lock-in effect has been achieved.
Zero-charged storage is provided from centralized data centers and is great for non-realtime no-frills storage needs. It assumes networking is free from the storage site to the user. However, it is unlikely we will see free storage provided from high-performance distributed data centers this decade even though it would reduce overall networking costs significantly.
In order to understand the implications of this, we can use an analogy to the massive rainfall in Texas during May 2015. The storms could in theory have helped address the world’s freshwater needs. The amount of rain that fell that month in Texas is sufficient to global drinking water needs for a few years. The only problem is that distribution is not free. Creating a free storage market with supplementary charges for value-added services assumes that a similar business model is possible for the required networking. But current network neutrality regulations prevent such models from being realized.
So it remains to be seen how zero-rated storage will be used. It makes sense for businesses and consumers to discuss a few strategic questions on why and when free storage could make sense:
- Which value-added services will be required to address my complete storage needs?
- What are my costs for the associated lock-in effects with zero-rated storage?
- What changes in my networking needs will zero-rated storage drive?
- How will the real-time requirements of video change my needs for zero-rated storage?
- What are the TCO savings I can gain by leveraging zero-rated storage?
About the author: Peter Linder is a Networked Society evangelist at Ericsson. He describes himself as a versatile visualizer, alliteration aficionado, movie maker and kinetic keynoter. His contributions focus on seven fields of market development: #SocietyShaping, #IndustryInnovations, #DeviceDiversification, #UnlockingUsers, #VersatileVideo, #NetworkNovelties and #BoldBusinessmodels. Peter joined Ericsson in 1991 and is currently based in Dallas, Texas.
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