Since cloud computing has gained stream, there is an industry wide “Race to zero” in regards to price. Cloud services keep getting cheaper and many analysts wonder if some cloud services will be free by default. If you caught some of the sound bytes Box’s CEO Aaron Levie last week, Levie goes on to mention that he sees “A future where storage is free and infinite.” It’s starting to seem as if Cloud’s Big 3’s pricing competition has put pressure on other vendors to drop their prices and because of this, we are seeing what could be described as survival of the fittest within the cloud market.
When public cloud first hit the scene in the mid 2000s, storage, compute and other IaaS services were heralded as being the darling of cloud computing. Since then, vendors such as AWS, Google and Azure have each cut their prices over 40 times. If this trend keeps happening, vendors will no longer see IaaS as a profit stream; they will see if as a necessity that must be offered freely or cheaply in the future.
Cloud companies are looking for ways to differentiate their cloud offerings. With OneDrive, you get access to many of the online versions of Microsoft Office apps. When big players such as Microsoft began undercutting cloud start ups in efforts to gain cloud market share, start ups such as Dropbox are faced with an interesting decision. Although a company like Dropbox has been in the cloud storage arena since the beginning, Dropbox and other companies must make a huge decision: innovate against your competition or integrate with your competition. Dropbox’s answer is to try to do both.
It was recently reported that Dropbox adopting Microsoft Office online apps which will help improve the functionality of its free cloud storage app. Julie Bort at BusinessInsider writes that tech companies should be scared about the “Race to zero” in cloud pricing as the trends means that cloud companies must continue to be on the cusp of innovation or risk being left behind.