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We are an online storage and sharing company. It seems to be a no-brainer that online storage will be very popular. However, after more than 7 years, this market seems to become hotter, but is not really getting much bigger. There are so many companies in this crowded space... How do you view the future of this business? How is your business going?

9/15/2007 3:20:06 AM

  • DriveHQ Webmaster
  • (1099 posts)
Subject: Re: What is the future of online storage?

Well, we view online storage as Great Features, Software and Services; think about external hard disks, USB pen drives, backup software / device, and FTP servers, DriveHQ Online Storage provides more and better features.

  • DriveHQ Online storage is more convenient. You can use it anywhere, without needing to carry / plug-in any physical device;
  • Remote sharing: unlike USB disks, you can share files remotely;
  • More reliable. We use high-end storage system and all data are backed up;
  • More secure - data is password protected, and can be encrypted.
  • No need to setup a dedicated FTP server / hosting service; it is already part of DriveHQ service;

Many online storage / online backup companies have positioned online storage / backup as a free service. Some VC-funded companies spend millions of dollars on advertisement, including paying over $2 per click on Google. Without a great product and a real business model, we doubt these companies can be successful. We'd like to invite those companies and VCs to rethink about their strategy:

  • If you don't have a good product / technology, then why spend money marketing it? Users won't be happy with your service.
  • If you have a good product that really offers great value, many users are willing to pay for it.
  • If you feel the free service model can be successful, think twice and do a calculation:
    • What is the premium service conversion ratio? what's the average annual price for premium users? What is your potential revenue if you have 10 million users?

Today, we have a good business offering high-end Online Storage & Sharing, Online Backup, FTP and SMTP hosting services. A high percentage of users are paying for our service, and on average they pay much more. We were able to invest more and more into technology and new feature development. On the contrary, a lot of our competitors are losing big money. They have spent a lot on marketing and advertisement, thus they have invested little on technology development. Because they "tell" consumers that the storage (service) is cheap / free, thus the conversion ratio is very low -- they end up with very little subscription revenue. 

Eventually, these companies will screw up themselves, and screw up their users. This has happened many times already -- millions of users were screwed up before. We would predict at least 90% of online storage / backup service companies will be out of business in the next couple years. From that point of view, backing up your important data to these companies is not as reliable as backing up to an external hard disk!

In summary, we believe Online Storage (Backup) Service is more about Software, Technologies and Services that Storage. We can only win this market by offering great service and great value. Competing by cheap / free service is not viable in long term - and it does a disservice to this market, as it drives this market smaller.



9/20/2007 11:24:16 AM

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