Why the Promise of Unlimited Cloud Storage Keeps Getting Broken

When it comes to unlimited cloud storage, history tends to repeat itself. Every so often, a cloud storage provider tries to promise boundless space for your precious documents. Put your files on our servers, they say, and you’ll never even have to think about what a gigabyte holds.

By Jared Newman

Before long, these companies realize they can’t hold up their end of the bargain, seemingly shocked by how much storage people actually consume. Microsoft recently became the latest example, discontinuing its OneDrive unlimited storage plans just a year after rolling them out. But as a failed attempt at unlimited storage, Microsoft has plenty of company from smaller firms like Bitcasa, Mozy, and

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Why does this keep happening? The cynical view would be that unlimited cloud storage is just a marketing ploy to capture customers, and that no company truly intends to keep the promise for the long haul.

But in talking to companies who’ve abandoned unlimited cloud storage, the reality is more nuanced. Yes, they’re often motivated by the marketing power that "unlimited" brings, but they also legitimately think they can pull it off due to incorrect assumptions about consumer behavior. Perhaps the next company to consider unlimited storage can finally learn from these mistakes.


In case this isn’t obvious, providing unlimited storage to an unlimited number of people isn't possible on a technical level. Every cloud storage service, limited or not, is paying for every gigabyte, which means costs go up as people consume more storage space. Providers of unlimited storage are merely hoping that the low-volume users will be profitable enough to subsidize the gluttons.

"The fundamental problem we have right now is this illusion that cloud storage is free," says Bitcasa CEO Brian Taptich. "The reality is that it’s not even remotely free."

A few years ago, Bitcasa learned the hard way that its unlimited model wouldn’t work. Drawing on its knowledge of how people used traditionally priced, tiered storage services, the company had assumed it would see a fairly even distribution between lighter and heavier users, Taptich says. Combined with "de-duplication" technology that prevents redundant data from being stored more than once in the cloud, Bitcasa figured it could keep costs down and stay in the black.

But after launch, the sheer demand from heavy storage users blew up those assumptions.

"When you go out with a value proposition that is almost entirely focused on an all-you-can eat buffet model, the first people to show up are the people who genuinely are interested in eating everything they can," Taptich says. The business quickly became unsustainable, and in 2013, Bitcasa raised its unlimited prices from $99 per year to $999 per year. Last year, the company eliminated the plans entirely.

The mere offer of unlimited storage also encourages all users to upload without restraint, says Gleb Budman, CEO of BackBlaze. In talking to other storage providers, he estimates that people consume five to 10 times more data when presented with an unlimited plan.

"If you’re charging people for storage, people are very careful about, ‘What do I actually need to put in here?’" he says. "If it’s unlimited, then people go, ‘Yay, I don’t have to worry about it,’ and then they store a lot more data."

Those heavy users don’t just carry a financial cost. They also put a burden on the company’s engineering resources. "That’s not about whether we’re making money or not making money," Taptich says. "It’s about our ability to service the 99% of consumers who aren’t the most egregious consumers of the unlimited offering."

Even plans that seem doable at first can be thrown off by technological advances down the road. That’s what happened to Mozy, which offered unlimited cloud backups from 2006 through 2011. In its later years, Mozy was blindsided by smartphones and the corresponding explosion in mobile photography.

"Just the amount of information that consumers were accumulating and storing skyrocketed," says Dave Robinson, Mozy’s head of marketing. Around the time Mozy switched to tiered storage plans, usage was tripling or quadrupling on a yearly basis, compared to 15% or 20% yearly growth in Mozy’s early days. It’s anybody’s guess what the next technological leap might be, but providers of unlimited storage would be wise to have contingency plans in place.

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When cloud storage providers give up on unlimited, they tend to avoid taking the full blame. Instead, they point a finger at the heaviest users for making the service unsustainable. Microsoft, for instance, noted that some users were exceeding 75TB of storage, or 14,000 times the average. Bitcasa blamed the demise of unlimited on "the growing number of suspected abusers" along with weak demand from everyone else.

Taptich now admits that it's a tricky problem to address. "The abusers thing, it’s a loaded word, and it bears asking questions around exactly what constitutes abuse," he says.

Besides, explanation never sits well with users, as it suggests they’re being punished for the actions of a few. But it’s also not a problem that’s easily solved. Unlimited is supposed to mean unlimited, and any attempts to discourage that kind of use looks like a betrayal.

One particularly messy issue for storage providers is that they can’t weed out legitimate high-volume uses from those that violate their terms of service. If a user with an unlimited consumer-grade plan is backing up their business servers or running a homegrown streaming video service, the provider should be able to shut that down. But doing so would involve looking at the actual files, which would be a breach of privacy and may not even be possible if the data is encrypted.

"Part of the implied understanding as the user of these services is that if I store my data with a cloud storage provider, they’re not going to be rummaging through the content of these files," says Mark Nunnikhoven, Trend Micro’s vice president of cloud research. (Trend Micro once offered unlimited storage for its SafeSync storage plans, but as a limited-time promotion.)

Nunnikhoven says providers could use computer algorithms to flag suspicious activity. But even this could break the implicit trust that comes with treating cloud storage like any other file repository. "It’s very much Pandora’s box when you start to cross that line of actively looking at your users’ content," he says.

What’s a provider to do, then? There’s always the possibility of raising the price of unlimited storage, but that ends up driving away the users that were supposed to make the service profitable to begin with.

"At least for consumers, there seemed to be some magic around that $5 price point," Mozy’s Dave Robinson says. "Beyond that, customers didn’t seem very willing to pay more—20 bucks, 30 bucks, whatever—for unlimited service."


Despite the bleak outlook for unlimited storage, the business model isn’t impossible. Online backup services such as BackBlaze and Carbonite, for instance, have been doing it for years.

The challenge, BackBlaze’s Budman says, is keeping storage and related costs low, and being able to stomach the notion of having some unprofitable users. To reduce its own costs, BackBlaze builds its own storage pods out of consumer hard drives, so it doesn’t have to lease space from a cloud provider like Amazon or Microsoft. The company has also built its own software, which doesn’t require a load balancer to deal with inbound traffic. This saves a lot of money that might have been spent on expensive equipment.

"What we have done is been very religious about deciding what’s important, what’s not important, and really focusing on how all of the money should go into storage, and as little as possible should go into other stuff," Budman says.

BackBlaze has even resisted expanding from a pure backup service into an always-accessible cloud drive service akin to OneDrive or Dropbox, though Budman claims the cost to provide the latter is about the same. "Keeping as much of a laser focus as possible was critical," he says.

Still, BackBlaze is now looking at ways to expand its service. A new program called B2, currently in private beta, will open up BackBlaze’s storage pods to third-party developers at a lower price per gigabyte than Amazon Web Service, Google Cloud, or Microsoft Azure. It’s possible that new unlimited cloud storage plans could be built off BackBlaze’s pods in the future.

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In the meantime, there’s a case to be made that unlimited storage is solving the wrong problem. Peter Smails, vice president of marketing at Mozy parent company EMC, wonders if maybe we’re just storing too much stuff in the first place. "Is anybody trying to tackle the problem of getting rid of the garbage?" he asks.

Smails has a point. Services like OneDrive and Dropbox will gladly dump all your smartphone's photos and videos onto their servers automatically, without even asking if they’re worth keeping. Maybe the real issue with unlimited cloud storage is that we’re generating entirely too much digital trash. But good luck making an effective marketing hook out of that.