Amazon lowering storage costs

For the past few months I’ve been debating with other OfficeDropStars why the heck Amazon hasn’t ever lowered cloud storage costs. Well, looks like they are finally bringing them down! The first tier of storage pricing is coming down from $0.14 per GB/mo to $0.125. The lower tiers are seeing about 12% reductions in prices – but the biggest tiers have no stated decrease (i.e. they are staying constant!)

It’s a little odd the top tiers aren’t going down. I guess this is because those rates are more likely negotiated with the company using them, where as the lower rates are pretty much just plain old taken by the company using it?

Why is Amazon lowering storage costs?

What’s motivating the lower storage costs? Are other cloud storage companies starting to eat at their new business? I kind of doubt that it’s MSFT’s platform, I don’t know any startups using it. Perhaps Amazon sees Apple’s iCloud starting to take some of the newest startup storage needs, where the startup simply pushes the costs of cloud storage onto the end user by integrating their apps with iCloud and letting the user deal with it? Think about it – Amazon has basically been in the cloud storage business since 2007 and I don’t think prices have come down before! And cloud compute costs for sure haven’t!

Comparison of New and Old Storage Costs

These are the numbers I got from Amazon, and are current as of Feb 7 2012.

Amazon Storage Tier Old Pricing/mo New Pricing/mo
1st 1 TB $0.140 $0.125
Next 49 TB $0.125 $0.110
Next 450 TB $0.110 $0.095
Next 500 TB $0.095 $0.090
Next 4000 TB $0.080 $0.080
Over 5000 TB $0.055 $0.055

The lower prices are effective as of Feb 1 and are listed here.

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Frenemies and the Cloud

OfficeDrop has been very aggressive in our “cloud manifesto,” promoting the concept of Frenemies in cloud services.  Earlier this year Prasad wrote about how competing in the cloud is making companies frenemies in TechCrunch.

Today he penned one on “Building a Business Around Frienemies” for FastCompany.

Frienemies

What’s a Frenemy (or Frienemy, depending on how you spell it)?

An important business philosophy that we have here at OfficeDrop is the concept of “Frenemies” – we will work with other services that would historically have been considered competition if it makes sense for our customers. It means that we value our customers’ workflow and actively look to integrate our cloud filing system with other online, cloud and SaaS services that our customers are using. Our customers are small businesses who want to move to a “digital office” and away from having their different work processes silo’ed into particular, proprietary applications.

This is a big deal and it represents a major shift in the way software is made and consumed. Old, desktop software that wrote special, unique and proprietary files and that trapped your data are out. Remember when a file could only be opened by the program that created it? Well, in the cloud all the smart providers have open APIs, which means your data can now be pushed (securely, of course!) from one application to another – making it easier for you to get your work done. This means that our service may have to work with other online storage companies, or companies that have overlapping features. Should we be competing with these companies and avoid integrating with them?

Nope. We can only survive if our clients WANT to use our service. They can get their data out at any time, so we need to offer the best paper-focused, searchable storage service we can – and let customers use other best in class services in conjunction with ours – like our FreshBooks document management integration. We’ve got an open API, and if someone who might be close in features wants to connect with our service they are very much able to create a tight integration with the OfficeDrop service.

 

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Helpful links on redesigning a site for better conversion

As I mentioned in a previous post, my company recently did a lot of cool testing during our site redesign. Anand Rajaram, OfficeDrop’s co-founder has a series of posts on Performable’s blog that talk about tips, tricks and tools that we used during the process:

Optimizing Conversion Rates Part One – Quantitative Tests

Optimizing Conversion Rates Part Two – Qualitative Tests

Optimizing Conversion Rates Part Three – Lessons Learned

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More info on the New England seed deals shrinking in size

CB Insights has a report on a topic I mentioned last week, the decreasing deal sized in New England. The report shows that the “In Q2 2010, the median seed VC deal size in both NY and Massachusetts were $425k and $480k, respectively, meaning entrepreneurs were raising smaller rounds.”

Interesting stuff – visit CB Insights here to see their take.

What is happening with venture/angel deal sizes in New England? Why are things getting smaller? It may be the sudden angel/seed renaissance… while the CB data does not include later stage investments, I think that New England did not have any huge ($50 million +) investments last quarter, which would impact the data I mentioned last week by driving down the average deal size… but I think something strange is going on.

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Microsoft needs to buy RIM; Apple vs. Google heats up

There is a really interesting read in the Times on Apple vs. Google. Of course, as I’ve touted my horn a number of times, I called this a few years ago – GOOG’s real target was Apple, not MSFT. This all leads me to think – hey, has Microsoft really left the building on mobile? I know there was the new Windows Mobile, but I don’t hear anyone talking about it…

MicroWho? Microsoft needs to buy RIM.

I can’t really think of any other way, unless they don’t want to own the OS. MSFT could become a premium app provider. I’ve just downloaded the Bing search app for the iPhone. And it’s pretty awesome. Image search is really slick. The navigation has a good UI, yielded good results to my hard-to-find friend’s house out in the burbs and I like the way the map unfuzzes into focus. I’d recommend it. So, I’m pretty confident that MSFT could become a really sweet application provider – but I’m also pretty sure the battle that the folks in Redmond want to win is for the OS, not just for cool apps. Anyway, a MSFT RIM deal is one I’d love to see.

Finally, I’ll leave you with some choice quotes from the Times article:

Mr. Schmidt hasn’t shied away from taking public swipes at Apple, either. In January… when asked what he thought of Apple’s new iPad, due to go on sale early next month, he joked to reporters: “You might want to tell me the difference between a large phone and a tablet.”

In filing the lawsuit over Android phones, he (Jobs) positioned his company as an aggrieved victim finally standing up to the playground bully. “We can sit by and watch competitors steal our patented inventions, or we can do something about it,” he said in a statement when the suit was filed. “We’ve decided to do something about it.”

When Mr. Jobs announced Mr. Schmidt’s departure from the board, he noted that with Android and plans for a computer operating system, Google was “unfortunately” entering more of Apple’s “core business.”

For lovers of the technology business world and for people addicted to their smart phones this is AWESOME. I can’t wait to see what these companies produce/invent next.

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Getting a higher seed round valuation

Charlie O’Donnell has a great post on getting momentum in a seed financing round. He is talking about momentum, but an understated undercurrent is how to get a higher valuation. I’d like to elaborate on one of his points, which is “understanding the social graph of the investors.” Charlie’s point is a great one – that if you can get a group of investors who talk with each other (and invest with each other) to talk about your company then you dramatically increase the chances of closing a deal with them. Thus, he recommends focusing and lighting a fire under one of these groups and using that to push toward a close. He is 100% correct.

However, I’d like to point out that this strategy does not maximize the chances of a higher valuation. I’ve found that angel investors who regularly invest with each other tend not to like to compete with each other – instead they like to co-invest with each other. While this is great if you can get things going, since you are likely able to raise enough capital to hit your fund raising target, it does not help you create an auction type environment where you get a higher valuation. As I’ve said before:

Once one group (an angel group) sets a pre-money valuation I don’t think the other angel groups are going to get into an auction type-process. These groups need each other to fill in bigger financing rounds. One group can’t outbid another aggressively, or they will not be able to find enough capital to meet most startup’s financing needs. A startup can get different syndicates of venture capitalists in a bidding war; I don’t know if this is as easily possible in the angel financing world. It may be a better idea to try to pit a VC against the angel groups if you are really valuation sensitive.

(That quote came from my post on how angel groups are professionalizing)

So, I will moderately disagree with Charlie’s last point of not pitching in too many places. If you are going to get a decent valuation, you probably need a couple of different groups interested – groups that don’t naturally invest together or information share with each other.

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