Cloud storage flow diagram

Consumer cloud storage

The ubiquity of the Internet has enabled consumers to store data on cloud services - but what's the catch?

A few years ago, the cloud storage market was nothing but a small blip in overall subscriber terms. It has, however, subsequently exploded in growth and popularity.

In fact, in the early days, because it was new and untested, very few research companies were tracking consumer cloud subscription numbers. But IHS estimates that there were around 150 million subscribers by the end of 2011.

By the end of 2012, they estimate that there were more than 500 million cloud service subscribers. By the end of 2013 this is likely to have reached 625 million – it is then expected to double over the course of the following four years to reach 1.3 billion subscribers by 2017.

It just so happens that a number of important factors have co-aligned to make the business concept of storing documents, pictures and other popular file formats work. The economics and the technology are now mature enough to make it viable.

"The cloud is a game changer in an age of near ubiquitous mobile broadband, offering benefits to consumers and cloud service providers alike," says Dr Jagdish Rebello, director for consumer and telecoms at IHS.

Certainly the big companies like Apple, Microsoft, Google and Amazon have moved heavily into offering cloud services to consumers. But they have been joined by a slew of pure-play cloud storage providers – led by market leaders Dropbox, as well as other companies such as Mozy, Carbonite and SugarSync.

There is a big difference in the strategy of the big existing consumer tech companies and the start-up pure play companies, as you would expect. Generally speaking, companies such as Apple, Google and Microsoft are offering cloud services more cheaply than the pure-players. The cheaper options do, however, come with a catch – they are designed to tie subscribers into their various other products.

Microsoft, for example, is using its SkyDrive offering, which it launched in 2011, to lock in many of its existing Microsoft Office productivity suite customers, be it individuals or enterprise customers, into this software ecosystem.

For Microsoft, it isn't just a simple folder that exists on your desktop. It has been designed to work best when used in conjunction with Microsoft's own productivity software. It will work with other software, but their capability isn't as detailed. Therefore, Microsoft hopes that many customers will continue using Office with Skydrive hand-in-glove, making a shift to other productivity software less attractive.

Google cloud storage

Google may appear to have launched its cloud storage products very late in the game, but Google Drive, which was made fully public in April last year, incorporates Google's existing offering, Google Docs. Google Docs has been offering cloud storage in a limited capacity since 2006.

Just like Microsoft, Google Drive works best when used with Google's own cloud-based productivity software. Google's reach as the lead search engine provider, and its dominance in the mobile operating space will give it many advantages when marketing cloud services to its existing subscriber base.

The move of Amazon, Google and Microsoft has fuelled speculation that other tech and social networking companies are likely to launch cloud-based storage services. Facebook, so far, has not launched any similar products for its users, but even social networking cannot avoid this trend. In a limited way, it is possible to let people share files within Facebook groups. Additionally, the company has closely integrated cloud storage providers such as Dropbox.

Being a pure-play operator, Dropbox does not have huge revenues to fall back on unlike the Microsofts and the Googles. Providing servers and storage over the Internet requires a massive investment that limits the amount of free storage that the company can offer to entice consumers in. Therefore, if you sign up for Dropbox you are only likely to get a limited amount of free storage in comparison to, say, established consumer tech companies. Typically this would be about 2GB.

But this has still enabled the start-up to build an impressive subscriber base with a clever referral scheme that offers the incentive of free extra storage space for each friend, family member or colleague that you manage to persuade to sign up for a Dropbox account. It has managed to build up millions of subscribers using this method.

This has been noticed by a number of other consumer tech companies, who see closer integration with Dropbox as a significant advantage to them. For example, at the start of 2013 at the Consumer Electronics Show, Samsung announced tighter integration of its cloud storage and file-sharing service with Dropbox, who said the deep integration includes upcoming new Samsung devices such as the new Galaxy Grand smartphone as well as a new range of smart cameras.

Users of these new devices will be offered up to 50GB of capacity when they activate their Dropbox account on these devices, according to Lars Fjeldsoe-Nielsen, head of mobile business development at Dropbox. Samsung also sees cloud storage as a great driver for its TV products, therefore all its new smart televisions will have Dropbox integration as standard.

Security concerns

But there is a trade off between having an Internet storage infrastructure that is simple to use and is possible to sync between various devices, and a system that it is rigorously robust and secure and still capable of syncing content between different devices.

A number of highly publicised attacks on Dropbox's security have occurred in recent months. The company has addressed this by adding an extra layer of security on its consumer offering. However, it has made this extra layer of security optional rather than compulsory.

Security company Sophos reported their concerns over cloud storage services and security early in 2012. Senior security engineer David Schwartz Bird warned users that cloud services such as Dropbox often store data in unknown and variable unverified locations, which are not to be trusted. Much of this has been driven by the current bring your own device culture being adopted in many organisations.

In fact, many companies are trying to limit the use of cloud storage providers within the workplace due to concerns over compliance and data loss.

Many organisations suggest that users employ a third-party encryption tool to ensure that any data stored within the cloud is secure before it is sent. However, Schwartz Berg believes that many of the consumer cloud services available will be compelled to offer their own security services. 

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