Gdrive, Skrydrive, etc.: A Boatload of Entrepreneurial Opportunity

So now we may just be about to see the birth of Google Gdrive. A long time in the making. According to Steven Levy’s book In the Plex this was originally ready to be be launched in 2008. 

What does this mean for users and, more importantly, for startups active in the areas of cloud storage and file management? Some bad news and some good news.

The bad news: Users will now expect copious amounts of cloud storage as a free commodity. If you’re a startup active in this space, expect the price expectations of your users to be very low indeed. Maybe there is a premium you can exact for whatever differentiates you, but it’s likely to be very very low. So I’d start to think long and hard about business customers if I were you. You disagree and feel that there is a robust business model adding value to consumer cloud storage? Let me know!

The good news: There is a whole bunch of stuff you can now offer to people who are moving their storage into the cloud:

  • A RAID-controller that stripes data across several of these services to ensure accessibility in the case of outages or disasters (RAID 5) or to maximize the amount of available storage (RAID 0). Because the free storage available from any single provider will always be calibrated to be a lot but not enough, in order to force freemium conversion. (Excursion: In normal economics you’d expect competition to drive prices (or on this case storage allocation limits) lower, but since this is likely to end up as an oligopoly, we should expect to have a pretty stable pricing). 
  • An encryption stack that makes sure that your data are safe in the cloud. This is easier said than done. Any robust solution would have to address a number of requirements:
  1. use well-understood and generally accepted cryptography algorithms. No room for homegrown and obscure crypto.
  2. require little or no footprint on the client. The less software to install the better.
  3. will, in my opinion, have to be based on a zero-knowledge approach, whereby the keys never leave the jurisdiction of the end-user. This has both technical, and even more importantly, legal aspects that need to be addressed.
  4. allow for transparent sharing of cloud content. Technically quite difficult.
  5. come from a European provider, in order to be more palatable to the European customer. How cool is that!
And, for extra credit, your security architecture may just involve striping, in which case you can combine both approaches to deliver more functionality (i.e. space and availability) and more security at the same time. 




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