Cloud storage prices drop, but experts and users say hidden fees exist

Amazon, Google and Microsoft have announced drops in public cloud pricing, but users and experts agree that hidden costs do exist.

If it seems like cloud storage prices are getting cheaper every day, it’s because they are. Amazon, Google and Microsoft have all dropped the pricing of their cloud storage within the last week, bringing their base storage costs down by an average of 1 cent to 2 cents per GB, which translates to up to 15% in cost savings for their users. But despite these price decreases, it's important to know about the additional charges that cloud storage users pay for individual transactions.

Medical device manufacturing company MedPlast Inc. first switched to a cloud storage solution a year ago and the company decided on a StorSimple 5010 appliance to transfer data to Amazon Simple Storage Service (S3). Not long afterward, MedPlast IT director Dan Streufert saw a sudden spike in his Amazon costs.

"We found we were paying three to five times more in transaction costs than we were actually paying for the storage itself with S3," Streufert explained.

He soon discovered the reason for the drastic increase. In just one month, MedPlast's StorSimple device logged a little more than 32 million PUT, COPY, POST and LIST requests with Amazon. Although GET transactions only cost Amazon customers 1 cent for every 10,000 requests, the requests for PUT, COPY, POST and LIST are billed at 1 cent for every 1,000 requests -- 10 times the cost. These cloud storage prices left MedPlast with a transaction bill for more than $300 in a single month.

MedPlast's StorSimple device also made 887,000 GET requests that same month, but those cost the company just 89 cents for nearly 1 million transactions.

"When people think about cloud storage, most of the time they think about price per gigabyte involved in the storage," Streufert said. "But what we've found, especially with the StorSimple solution, is that the transaction pricing also needs to be taken into account."

Early public cloud storage adopters, like Streufert, say it pays to shop carefully for a provider because costs can vary depending on which applications you put into the cloud. It's also beneficial to keep a close eye on cloud pricing even after implementation because, as price drops in the last week have shown, cloud storage providers are hoping to recruit new customers with continuing discounts on base storage costs. Transactional costs are another point on which many vendors compete, and they're an area that some IT directors and storage professionals are focusing on when determining their cloud storage strategies.

To help MedPlast cut costs, Streufert switched to Microsoft Windows Azure public cloud services. Azure charges 1 cent for all transactions, regardless of whether they're GET, PUT, COPY, LIST or POST requests.

Evaluate apps, competition and contracts

Last month, Amazon reduced S3 pricing, bringing its cost for US standard cloud storage down approximately 2 cents per gigabyte. The price dropped from 14 cents to 12 cents for the first TB, from 12.5 cents to 11 cents for the next 49 TB, and from 11 cents to 9.5 cents for the next 450 TB. Transaction costs, however, stayed the same. According to independent industry analyst Lauren Whitehouse, S3 users could expect a 12% to 15% drop in overall costs as a result.

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Other public cloud services are lowering their costs to compete with Amazon. Answering Amazon’s recent price reduction, Google also decreased its storage rates by approximately 1 cent per GB, giving customers an estimated 7.69% to 15% savings, depending on the size of their storage. The company now charges 12 cents per GB for the first TB, 10.5 cents per GB for the next 9 TB and 9.5 cents per GB for the next 90 TBs. Similar to Amazon, Google charges 1 cent for every 1,000 PUT and POST requests, and 1 cent for every 10,000 GET and HEAD requests. Microsoft Window's Azure also knocked its storage costs down this week -- the storage provider was charging a flat fee of 14 cents per GB, but recently lowered its rates to just 12.5 cents per GB, on par with Amazon and Google.

Rackspace Inc. takes a different approach; its website states that customers pay 15 cents per GB regardless of size, but the company doesn’t charge for any type of request transactions.

Though these differences in pricing appear minimal, depending on the application a company is running, they can make a huge difference on a bill.

"There are major differences between a very simple SQL data-based application vs. an instance of SharePoint or Exchange, where there are multiple components in a server form," Whitehouse explained. "If I'm running a very simple app and I don’t need a rapid response time on those transactions, I can make different decisions about the type of storage I use in the cloud."

Customers like MedPlast's Streufert can easily leave one cloud storage provider for another because public cloud providers rarely require a long-term commitment.

However, contractual lock-ins do exist. Signing a contract may mean a price break, and that's exactly how Nirvanix Inc. pricing works.

Nirvanix services mostly enterprise customers with hundreds of TB of data. Those customers pay between 10 cents and 20 cents per GB, and aren't charged for any bandwidth, upload, download or transaction costs. But they typically sign three- to five-year contracts with Nirvanix.

The goal is to reward customers who commit. Steve Zivanic, vice president of marketing at Nirvanix, said pricing is based "not just on the size of the cloud storage deployment, but on the length of the service contract."

Pricing factors based on individual needs

Taylor Higley, director of information services at the American Federation of Government Employees (AFGE), uses a TwinStrata CloudArray to back up his company’s data to Amazon S3.

Higley switched to the cloud 18 months ago, and said he chose Amazon S3 for two reasons. "For one, just from a high level, it was the least expensive option. But two, I had read something that said 19 times [Amazon] had lowered prices, so it seemed like a good bet that our costs would go down over time," he explained. "I haven’t seen quite the same reduction with other providers."

According to Amazon’s website, March marks the nineteenth time it has lowered the price of cloud subscriptions.

Aside from transaction costs, other factors that can affect your pricing include the size of your data store, number of transactions, security and performance requirements, which can be determined by running reports on current systems.

Now that MedPlast's Streufert has had the opportunity to test drive the cloud, he believes his StorSimple appliance works best with Azure's pricing platform.

"With Azure, [the transaction costs are] just a small fraction of the storage expense," he said. "It's a non-issue."

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