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A company offering 'unlimited' anything does it either because they want to attract new customers and switch to a tiered plan later, or because they plan to go

A company offering 'unlimited' anything does it either because they want to attract new customers and switch to a tiered plan later, or because they plan to go bankrupt in the short term.

smlacy 16y ago
Explain? Assuming that storage costs are halving every 18 months, I would assume that charging $N/mo for backup (amortized over a lifetime of say, 4 years) would be a really reasonable business model. As they say, there's always going to be outliers, all you need to do is cover the average cost of backup for the average user. This seems easy to me, and very easy to plan & estimate what your costs are.
- whatusername 16y ago
  Demand isn't static. Your costs decrease by the storage equivalent of Moore's Law, but your customers demands increase by roughly the same amount. In short -- The first digital camera I used had a floppy disk that fit about 20 photos. (Maybe 75KB). My camera now takes 7.5MB Photos (higher if I shoot in raw) and rather than taking 20-40 in a session -- I'll take 100. The first computer I connected to the internet had a 4GB Hard Drive. I currently have around 3.9TB of storage connected to the internet. This isn't a gmail play. Barring celebrity status -- you can only recieve so many emails... (Dunbars number and all that). As my storage costs decrease I use more storage and need more backups. They mention that these roughly balance out. The problem they have is that costs like electricity/cooling/staffing are not likely to be going down any time soon.
BlazingFrog 16y ago
That's exactly what I keep thinking about BackBlaze (I am one of the "hogs" they talk about on whom they don't make money) but they seem to indicate they are profitable, for now... I guess it's viable as long as they don't become too popular and start attracting more "hogs".
- shaggyfrog 16y ago
  Shouldn't that be "frog" and not "hog"? (From one to another. Frog, that is.)
  - BlazingFrog 16y ago
    Nice... ;)
jellicle 16y ago
This is just not necessarily true. There are plenty of situations where there are natural limits to the consumption of whatever is being provided. Unlimited local calling. Unlimited tap water. Unlimited Chinese buffet. The average consumption of your customers is much more important than the consumption of your single largest customer in many (not all) cases. The one guy who comes in and eats 14 plates of buffet food does not change the profitability of the enterprise.
- FiReaNG3L 16y ago
  The problem comes when your service becomes very popular, and 100 of those 14 plates-eating guys show up.
  - steveklabnik 16y ago
    Not if you also have 1000 supermodels who eat a third of a plate.
  - amalcon 16y ago
    That's only a problem if the relative proportion of 14 plates-eating-guys increases. So, maybe if your buffet develops a following specifically among 14 plates-eating guys, this could be a problem.

A company offering 'unlimited' anything does it either because they want to attract new customers and switch to a tiered plan later, or because they plan to go bankrupt in the short term.

smlacy 16y ago

Explain? Assuming that storage costs are halving every 18 months, I would assume that charging $N/mo for backup (amortized over a lifetime of say, 4 years) would be a really reasonable business model. As they say, there's always going to be outliers, all you need to do is cover the average cost of backup for the average user. This seems easy to me, and very easy to plan & estimate what your costs are.

whatusername 16y ago
Demand isn't static. Your costs decrease by the storage equivalent of Moore's Law, but your customers demands increase by roughly the same amount. In short -- The first digital camera I used had a floppy disk that fit about 20 photos. (Maybe 75KB). My camera now takes 7.5MB Photos (higher if I shoot in raw) and rather than taking 20-40 in a session -- I'll take 100. The first computer I connected to the internet had a 4GB Hard Drive. I currently have around 3.9TB of storage connected to the internet. This isn't a gmail play. Barring celebrity status -- you can only recieve so many emails... (Dunbars number and all that). As my storage costs decrease I use more storage and need more backups. They mention that these roughly balance out. The problem they have is that costs like electricity/cooling/staffing are not likely to be going down any time soon.

BlazingFrog 16y ago

That's exactly what I keep thinking about BackBlaze (I am one of the "hogs" they talk about on whom they don't make money) but they seem to indicate they are profitable, for now... I guess it's viable as long as they don't become too popular and start attracting more "hogs".

shaggyfrog 16y ago
Shouldn't that be "frog" and not "hog"? (From one to another. Frog, that is.)
- BlazingFrog 16y ago
  Nice... ;)

jellicle 16y ago

This is just not necessarily true. There are plenty of situations where there are natural limits to the consumption of whatever is being provided. Unlimited local calling. Unlimited tap water. Unlimited Chinese buffet. The average consumption of your customers is much more important than the consumption of your single largest customer in many (not all) cases. The one guy who comes in and eats 14 plates of buffet food does not change the profitability of the enterprise.

FiReaNG3L 16y ago
The problem comes when your service becomes very popular, and 100 of those 14 plates-eating guys show up.
- steveklabnik 16y ago
  Not if you also have 1000 supermodels who eat a third of a plate.
- amalcon 16y ago
  That's only a problem if the relative proportion of 14 plates-eating-guys increases. So, maybe if your buffet develops a following specifically among 14 plates-eating guys, this could be a problem.