Google Drive Doesn’t Change the Cloud Storage Economics

EDIT: More information is available now and I’ve written an update and corrected the story below.

As expected, Google Drive launched today with 5GB free cloud storage and 1TB for $49.99.  That is aggressive pricing, but it does not fundamentally change the cloud storage model or economics. Google Drive still uses a centralized data center cloud storage model, where they are supporting the cloud with massive physical infrastructure.

So what? You ask.

The what is that this centralized model is not sustainable. Data is growing faster than we can build data centers to store it, and the combined costs of land, facilities, equipment, bandwidth, security and personnel to build and manage a data center is significant. And the cost of data centers is only going up. Sure, Google is big enough they can afford to lose money on the Drive initiative, but that cost has to be recouped somehow.  For most cloud storage vendors, the cost is passed on to the customer, which is why cloud storage is disproportionality more expensive than local storage drives.

Google Drive is shaking things up, coming out of the gate with what looks like a 5 cents per gigabyte – compared to 10 to 50 cents common with most cloud storage solutions. To do so, there are bound to be limitations or other gotchas. For example, Google’s last attempt at this was to provide storage through Google Apps, but it was fairly limited to data being generated through Google Apps. In Google Drive there also seems to be a strong focus on Google Apps integration.

It appears the only way you can get your “real” data into Google Drive is by uploading it using a browser.  This can be a painfully slow process if you have big files – it would be hard to get 5GB into the cloud that way, let alone 100s of GB or TBs.  For the service to be useful, it is critical that it can seamlessly work with your existing data and where you are generating most of your new data – files on your devices – Servers, NAS units, Desktops, laptops, etc.

I would to do a more in-depth analysis of the solution, but unfortunately Google Drive does not seem ready for prime time at launch.  Everyone I know is getting “we’ll let you know when we’re ready” message when trying to download or sign up. So more to come when I can actually play with it.