Tech Crunch

App revenue climbs 23% year-over-year to $21.9B in Q3

Global app revenue continues to climb, thanks to the growth in mobile gaming and the subscription economy. In the third quarter of 2019, consumer revenue grew 22.9% year-over-year from $17.9 billion to reach an estimated $21.9 billion across both the App Store and Google Play
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David Friend

Egress Fees Don’t Work for Users – Unlimited Free Egress Is Here

Unlimited Free Egress

All of the leading object storage vendors – Amazon, Google, and Microsoft – charge for egress (“egress” means retrieving data from storage). Even my company, Wasabi, originally charged for egress.  After taking a closer look at the bigger picture, however, I’ve come to the conclusion that egress fees don’t work for users. In fact, one can argue that they are the number one impediment to the migration of data to the cloud today. Like old cell phone plans that charged by the minute for talk time, egress fess are bound to disappear because they simply don’t align with user needs.

Object Storage for Your Backups

To paint a picture, I want to explain the four reasons why egress fees don’t work for customers – and why they are, ultimately, going to disappear:

Change of Behavior – If you have been storing your data in your own data center, you don’t pay for egress. You pay for storage. If you need 100TB of storage, you buy it from EMC, NetApp, or some other vendor. Having made the investment in storage hardware, it makes no difference whether you access your data ten times or ten million times. You don’t have to think about egress as there is no incremental cost to accessing your data. With cloud storage, every time you touch your data you’re going to get charged. That’s a big change in behavior, and people tend to resist something new when it doesn’t feel like it’s a change for the better.

Predictability – When it comes to budgets, IT departments need to know what services are going to cost before they buy them. They want predictability for the simple reason that they are accountable for expenses – and there’s no way to know prior how much egress is going to cost. In fact, it’s not something that most people can meter even if they wanted to. As long as egress charges are unpredictable and IT managers are held accountable for cost overruns, users will be loathe to take a chance on the cloud’s uncertain costs.

Getting Nickeled and Dimed Just Doesn’t Feel Right – I’ve heard this from IT people dozens of times. The question goes something like this, “You mean I have to PAY to get my own data back?” Imagine if you had all your photos in Google Photos, but every time you wanted to look at one, they charged you a penny. You’d sit there staring at the screen wondering whether you really wanted to look at that picture. Time and again, the market has shown that users would rather pay a fixed amount and have unlimited access, even if in the aggregate cost is a little more.

Simplicity – My idea of a simple storage bill is one line: Storage. No tiers. No add-ons or hidden fees for things like egress. Just one simple price. The price list for Amazon’s cloud storage products goes on for pages and a whole cottage industry of consultants has emerged to help you figure out how much it’s going to cost you to move to the cloud.

There are plenty of other “all you can eat” pricing plans that have won out. Ten years ago, it was common to find car rentals that charged by the mile. Today, everyone has gone to unlimited mileage. In 2012, all the major cell phone carriers had limited data plans. Then, T-Mobile introduced unlimited data for a flat monthly fee and their subscriber base shot up by over 40% within six months – the only major shift in market share among the major carriers in a decade.  They forced both AT&T and Verizon to follow suit because they correctly perceived that people would rather pay a little more for their monthly subscriptions than having to worry about exceeding the cap on their data plans.

cloud backup services free egress

The same was true of landline phones when I was growing up. Back then, long distance calls were billed by the minute. Today, everyone has unlimited talk and text. Unlimited plans are simple, predictable, and just feel right.. Simplicity always wins.

I’ve seen the power of unlimited pricing models in my own business career. Carbonite, the backup company that I co-founded, turned the backup industry upside down in 2006 when it introduced the industry’s first “unlimited backup for a flat price.” Up to that point, backup had always sold by the gigabyte. Industry competitors, including Iron Mountain, EMC, and HP opined that we would soon be out of business. Today, Carbonite is one of the largest backup companies in the world and the other guys all dropped out of the consumer backup business.  The company recognized that consumers hate it when they don’t know what things are really going to cost – and it pays to put the customer first.

In the cloud storage industry, Amazon, Google, and Microsoft all make it free to upload data to their cloud storage, but if you want to get it back, you have to pay for every gigabyte.   Amazon, for example, charges 2.3 cents to store 1 GB for a month. But they charge 9 cents per gigabyte to access that data over the Internet. If you have a petabyte of data stored in Amazon and you want to get it all back (say, to migrate to another vendor) it will cost you $54,000 in egress fees.  But that’s not all; Amazon charges for every PUT, GET, POST, and LIST operation. Accessing a petabyte of data will probably require millions of these operations, depending on the average size of your objects, potentially adding thousands of additional dollars to your bill. A cloud storage bill, in my opinion, should not have 10 or 15 line items. It should have one, like this:

Storage Amount   10TB x $.0049 per GB  = $49.00

This is the pricing model that customers have been asking for. Cloud storage is never going to be fully accepted until vendors adopt pricing models that allow users to know how much they are going to spend before they make the commitment. Users will continue to resist pricing schemes that smell of vendor lock-in. And the simpler the pricing scheme, the simpler the decision to migrate from on-premises storage to the cloud.

By David Friend

David Friend Contributor
CEO of Wasab
David Friend is the Co-founder and CEO of Wasabi, the hot storage company that delivers fast, low-cost, and reliable cloud storage at 1/5th the price and 6X the speed of Amazon S3. Prior to Wasabi, David co-founded Carbonite, one of the world’s leading cloud backup companies. A successful tech entrepreneur for more than 30 years, David got his start at ARP Instruments, a manufacturer of synthesizers for rock bands. David has also co-founded five other companies including Computer Pictures Corporation, Pilot Software, Faxnet, and Sonexis.
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