It’s the end of the road for freemium cloud services

It’s the end of the road for freemium cloud services

“The first goal of a startup is not to go bust. And going bust is very easy to do if you are a freemium company, if you don’t choose the features right.” Professor Vineet Kumar, who researches the freemium business model, couldn’t have better summed up the situation in cloud storage today.

After five years of betting on growth from the consumer upwards, cloud storage startups are finally waking up to the bottom line. Macroeconomic trends have rendered “land and expand” obsolete. The “Big Four” cloud players — Google, Amazon, Microsoft and Apple — are offering terabytes of data storage for less than the cost of a glass of cabernet.

Especially in the enterprise realm, outside players face two choices. Carve a niche, or plan for an exit, but quickly, before the tech bubble bursts. Those still betting on the freemium strategy will face annihilation.

Still, despite all obvious indications, cloud providers keep trying. Why is that?

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