Consumer based back-up services like Mozy, SugarSync, and Carbonite all promise their users piece of mind by backing up their computer files to the cloud and making them available for download in the event of catastrophe. Should you spill coffee on your laptop and fry all of your presentation, novel or family photo albums, you can simply login to your account on a new machine and immediately start downloading everything you hold dear. This kind of comfort is clearly appealing to the average computer user. Mozy, one of the industry leaders, claims 3 million customers alone. However, there are a number of factors working against these consumer back-up services, causing some to question whether their business models are ultimately viable or not.
Cloud vs Local Backup
For one thing, the amount of data that an average user stores has skyrocketed in the last few years. High resolution photo albums, large video files and extensive music libraries are ubiquitous across personal computers. Given the wide availability of thumb drives and external hard drives exceeding 1 terabyte of storage space, some question the wisdom of paying the consumer back-up services regular subscription rates for online storage when users can back-up their files locally and cheaply.
In almost all cases, it’s much quicker to write files from your laptop or PC to an external flash drive than it is to send them all online to a back-up service’s server. Additionally, these consumer back-up services simply don’t work unless you have an uninterrupted connection to the internet. Any changes made or files created on your system can’t be secured until you’re online and enough time has elapsed for the updated files to be transferred to the cloud. Consumer back-up services attempt to address these issues by starting off all new clients with a large initial back-up, which may take several days or even longer depending on the size of the folders being stored, and then simply mirroring the user’s system file by file. Each time a subscriber saves a document or edits a photo, for example, a back-up management program running in the background will immediately earmark the updated files for online storage.
Can Online Storage Companies Make Money?
Another pain point for these companies is stiff competition within the industry, which has motivated their aggressive pricing structures. One of the leading services, Carbonite, only charges its customers a flat yearly rate of $59 for online back-up in the cloud. Mozy is only $5.99 per month for home based computer users. Competition for users between consumer back-up companies themselves is fierce, not to mention the added pressure of local storage options. Reliable, large external flash drives of 500GB or more can be purchased for as little as $60 and can be taken on the go so that users have access to their critical files at any given computer in airports, hotels and business conferences, with or without a live internet connection. Thumb drives of up to 16GB cost much less. This strong industry competition, coupled with excellent local storage options, is making it difficult for consumer based back-up services to remain profitable. Bizjournal.com reports that Carbonite lost $26 million in 2010 and continues to lose money as it scrambles to advertise its services and obtain new users.
Consumer back-up services could survive if they continue to court users who value redundant data store in the cloud in addition to their local back-up options, but it’s clear that these companies must take on more users quickly or drastically change their consumer-based pricing models if they’re to remain viable into the future.
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