CLOUD COMPUTING

Is Cloud-Based Storage Too Expensive?

Frank J. Ohlhorst | Date: 07-18-11 | Comments

Cloud-based storage is anything but cheap. Nevertheless, can value trump cost when it comes to saving data in the cloud?

If you look at its cost at its most basic level, storage proves to be very cheap. Today, you can buy, for example, a 2-terabyte hard drive for around $75. That works out to around three cents per gigabyte�now that is cheap.

Move that into the cloud, and cost skyrockets to about 60 times more expensive to store that data for three years (roughly the warranty period for the typical hard drive). That figure is based on industry giant Amazon�s $0.125/GB/month pricing. With such a service, a customer who wants to store 2TB in the cloud for three years would pay about $4,500, or $2.19 per gigabyte.

Clearly, the overhead of a cloud infrastructure adds to the high cost, but where is the economy of scale? In a typical business case, where a business is offered a service for $1 or for $60, the business would go for the $1 cost and not even consider the $60 offering. Luckily, data storage falls under a different concept�the data has actual value, while the service of storing it is secondary. So to calculate the cost of storage, one has to take into account the cost if the data is lost, yet temper that against the value and resiliency of storage medium.

That proves to be a very complex calculation, in which numerous holes can be poked and assumptions, both valid and invalid, can be made. For example, how likely is it for a hard drive to fail and lose data? Not very. Most drives outlive their usefulness and are replaced by larger drives before they fail. On the other hand, what if the drive is stolen or lost to a natural disaster, or the data is damaged due to malicious activity? Those are scenarios that happen more often than businesses care to admit.

In those situations, $2.19 per gigabyte proves to be a bargain. However, there are ways to protect data that do not involve using an online service. Everything from USB drives to tape to RAID arrays can be incorporated to protect data or even replication to another site. And in most cases, those hybrid solutions still wind up below $2.19 per gigabyte.

So the question becomes, how do you truly determine value, without buying into the hype of a new technology? With storage, that proves to be a difficult answer to come up with. However, there is change in the air. Many hosted storage vendors are competing more fiercely for your storage dollars, and prices are dropping. Better yet, new technology is coming on the scene that is driving prices down further.

Take, for example, Symform, an online backup company that is looking to cut storage fees by a factor of 10. Symform geographically disperses data over a large number of nodes in a storage cloud, effectively using an economy of scale to reduce costs, while adding additional protection to the data.

Other vendors are looking to take a hybrid approach by combining onsite storage appliances with cloud-based backup. That way a customer is purchasing network storage for onsite use at a low cost per gigabyte, and then choosing to use the cloud for backup purposes only as a just-in-case methodology. Once you tie disaster recovery to the cost of storage, cloud-based offerings seem to increase greatly in value�simple because disaster recovery is a necessary evil that proves to be expensive to begin with. That realization makes it much easier to justify various storage technologies.

Instead of blindly leaping into the cloud for storage needs, IT managers should look at the big picture, starting with �Why am I adding storage?� and �What other benefits can I derive from new storage?� It will be those questions that assign the value to storage technologies and prove whether or not cloud-based storage is viable for a particular business.

Frank Ohlhorst is an award-winning technology journalist, professional speaker and IT business consultant with more than 25 years of experience in the technology arena. He has written for several leading technology and business publications, and was also executive technology editor at eWEEK and director at CRN Test Center.