Cloud based backup freeriders?

February 1, 2011 2:53 PM

How do the economics of cloud based backup services work?

AskMe has seen a lot of questions about which online backup service is best. A quick survey of commonly suggested providers:

Backblaze ($5/month unlimited)
Carbonite ($55/year = $4.58/month unlimited)
Crashplan ($1.50/month 10GB, $3/month unlimited)
Mozy ($6/month 50GB + 20GB/$2)
Rsync.net ($0.80-$0.32/GB/month)

Excluding rsync.net since they host themselves and are somewhat expensive, how are these prices for unlimited storage possible? Amazon S3 reduced redundancy storage is $0.093-$0.037/GB/month, excluding the cost of transfers or requests. I presume those prices represent close to the minimum these services are paying, either by outsourcing to S3 or somehow being as efficient than S3.
1) Is the relatively static and rarely accessed storage used in a backup scenario actually far cheaper than S3's prices would indicate?
2) Is the entire industry based on the idea that most people won't store more than a few GB and in doing so they subsidize the (few?) people who store 250GB-1TB of music/video/pictures? Surely at the rate storage needs of even the most basic users have increased this is not sustainable.
3) Am I correct in believing that all $5/month unlimited type backup services are doomed to go the way of Mozy and raise prices as quality quickly degrades?

posted by ChrisHartley to Computers & Internet (16 answers total)

2 & 3 can be foretold by looking at the all-you-can-eat music plans that all are gone. It's the last remnants of the "1,2,3 profit, we'll figure out stage 2 later" mentality left over from the dotcom boom. Maybe add in a dash of hope that storage costs will fall faster than people will use it (imho unrealistic, as cheaper storage for "my" backup service will just be offset by cheaper storage for my customers, with corresponding jumps in their usage.).
posted by nomisxid at 3:09 PM on February 1, 2011

Speculative answers:

1) I can buy a 2TB hard drive for about $70, approx $0.07 a GB. I'd assume a company could get bigger and cheaper and knock a few cents off that.

2) Almost certainly. I'm currently uploading 300GB of stuff to Carbonite (current estimate, only uploading during non-work hours = 100 days - itself that seems a barrier to entry). This is because I've lost my music collection once, and I want an off-site backup as well as my own nightly. I'd suspect most people are using it to back up 20GB of photos and documents. Whether that's true: dunno.

3) Maybe not. Prices are only going to come down for storage and bandwidth. I suspect competition is what will keep things cheap: if a few providers do go to the wall, the rest might take the opportunity to raise their prices.
posted by Hartster at 3:10 PM on February 1, 2011

Best answer: This blog post from backblaze explains how they do it. Reminder: its from 2009, so prices in here have gone out of date, but it can show you how some thinking about the application specifics leads to lower-cost solutions.
posted by jeb at 3:18 PM on February 1, 2011 [2 favorites]

There must be a thin margin shakeout here somewhere, since Mozy killed their unlimited plan today.
posted by nonliteral at 4:25 PM on February 1, 2011

Best answer: Don't forget that these services can checksum files and only store one copy so if someone backs up their windows files it's not 2 GB times every users, but 2 GB plus a few bytes per user for references. Because there's some level of file duplication between users it's de-facto compression for the storage provider, lowering their actual cost per GB.
posted by GuyZero at 4:40 PM on February 1, 2011

Carbonite only backs up your internal drive and doesn't include system files and applications.
posted by fief at 5:11 PM on February 1, 2011

GuyZero has the most important part of the equation. There was a previous askme on how dropbox worked, but I can't find it. Basically as long as my file and your file are exactly the same there need only be one file and then a reference to it in both accounts. This would save on huge amounts of data.
posted by cjorgensen at 5:26 PM on February 1, 2011

Here's that dropbox question.
posted by box at 5:49 PM on February 1, 2011

Best answer: Overselling/overcommitment has always been omnipresent in telecomms/computing. The phone company cannot possibly handle every customer picking up a phone and dialing at the same time. Your ISP cannot possibly handle every user at once downloading at their max speed, nor could they handle more than a few users whose usage pattern isn't bursty (i.e. you cannot leave your connection pegged all month.) Dreamhost cannot possibly handle anything close to "unlimited" storage or transfer for nine bucks a month; they will call you a AUP/TOS violator if you try to use too much. All of these services are predicated on the assumption that not every user can or will use the maximum all the time, and that in fact most users use far less than the maximum, otherwise they couldn't possibly be financially solvent. So yes, it's just a shell game. Whenever you see "unlimited" storage or transfer without a SLA (service level agreement) you should be suspicious and realize that the service is nothing remotely close to "unlimited".
posted by Rhomboid at 7:36 PM on February 1, 2011

Neato!

Does anyone have a preference between Carbonite vs Backblaze vs CrashPlan?

BackBlaze specificalyl mentions you can backup external drives, which is kind of cool.
Crashplan mentions your ENTIRE computer, which is good because all of my data is on a 2 TB D: drive.

And Carbonite mentions "However, for exceptionally large backups – 200GB or more – backup speed will slow noticeably after the first 200GBs have been backed up."
so.... do any of the other sites do that too?

I want my entire 2 TB drive backed up on the cloud. Are there any issues with Backblaze or Crashplan I should watch out for?
posted by Theta States at 8:38 PM on February 1, 2011

Backblaze makes a pretty convincing argument for unlimited...
posted by Theta States at 8:45 PM on February 1, 2011

It is kind of cool that Crashplan has a service to send the hard drive by mail.
Tragically, it's not available in Canada. boo.

I realize that a typical 50 k/s upload rate my home internet has, I'm only uploading just over 4 4GB/day.
To transfer 1853.44 GB of data, that would take 450 days of continuous transfer!
uggh.

And since internet caps are stupidly low in Canada (even worse thanks to the recent CRTC decision...) uploading 120 GB/month would cost in that department as well.

To that end, it might be worthwhile for me to drive to the USA to do the hard drive thing through postal outlets there.
posted by Theta States at 8:59 PM on February 1, 2011

as an aside, based on mozy raising their fees, i came to this thread to find suggestions for an alternative. crashplan is offering a 15% off code on facebook for those who are leaving mozy. (not affiliated, just thought this was a great offer and wanted to share!)
posted by misanthropicsarah at 10:47 PM on February 1, 2011

Response by poster: Thank you for the helpful answers. This confirms what I suspected, that while hardware and hosting costs may be fairly cheap they are still significant and you can't really expect to store 500GB+ for $5/month indefinitely. I am surprised that you don't hear more people complaining about being throttled back or cut off for storing too much if it is as much of a shell game as it appears to be.
posted by ChrisHartley at 5:40 AM on February 2, 2011

I am surprised that you don't hear more people complaining about being throttled back or cut off for storing too much if it is as much of a shell game as it appears to be.

In most cases the service provider is constantly adding capacity behind the scenes to make sure that doesn't happen, because they need to maintain the illusion that their service is unlimited to keep customers happy, which is a win-win situation... until the point comes where the pace required to keep this up outstrips the rate of growth of new sign-ups, and then suddenly you get an email that has the audacity to say something like, "In order to better serve you, ..."
posted by Rhomboid at 4:27 PM on February 2, 2011

I ended up buying Backblaze because of this post; sending 500 GB over a cable modem took around a week.

I'm glad they upped the max file size to 9GB but I will have to split up some of my raw video files to get them into their backup (I have a few 10 - 15 GB that are too large for their limit though).
posted by wcfields at 9:53 AM on March 31, 2011