Google Raises Storage Ceiling – for a Fee

Google has begun offering users of its various Web services the option of getting more storage, but that additional capacity will come at a cost.

Google will offer users of Gmail and Picasa, its online photo storage and sharing service, the chance to expand the amount of storage supporting their accounts. Gmail users currently get about 2.8 GB of free storage space and Picasa users receive 1 GB for free.

Starting Friday, users can sign up through their Google accounts to buy as little as 6 GB of additional storage for US$20 per year, or up to 250 GB for $500 annually. It will also offer a 25 GB plan for $75 and a 100 GB option costing $250.

More to Come

Though the storage service only applies to those two services now, Google software engineer Ryan Aquino, who announced the new service in a post to the official Google blog, said Google plans to make the service available to support other Web services, including online productivity programs such as Google Docs and Spreadsheets.

The paid storage option is a twist on Google’s original thrust with Gmail, which was that it offered almost unlimited storage for free. At the time, Gmail dramatically increased the amount of free storage available to users, though other Web companies quickly followed suit by boosting how much free storage space they offered their Web-mail users.

Google promoted Gmail by saying it would allow users to keep e-mail indefinitely and create a searchable database in the process.

Pricing and Plotting

However, because many users are now using Gmail to back up information on their home or work PCs, many are now approaching the nearly 3 GB limit.

The storage service launch comes just as Microsoft goes public with its Live SkyDrive service, an upgrade over the Windows Live Folders offering. Users can get up to 500 MB of capacity for free — assuming they sign up for the Windows Live Web-based services.

However, by capping the storage size — SkyDrive will only accept files of 50 MB or smaller — Microsoft is not positioning that service as a Web-based backup alternative. Another option is Amazon’s S3 service, which is priced somewhat lower.

For many users, a removable hard drive or other storage device may also be a less expensive option than Google’s storage fees.

Google continues to get the vast majority of its revenue from a single source — paid search advertising — but has moved into a slew of new areas that it hopes will help replace what will eventually be slowing growth from that core product. From video with YouTube to merchant payments though Google Checkout, Google has grown to touch much of the online world, including the e-commerce space.

“Google and Amazon have been on a collision course for some time,” search expert John Battelle told the E-Commerce Times.

Both have emphasized Web services, he noted, and both now have paid online storage offerings — a product seemingly outside the realm of their usual business. Google has also butted heads with another e-commerce giant — angering eBay with a promotion for Google Checkout to the point where eBay briefly yanked its Google AdWords spending.

First Step?

In addition to adding a new revenue stream, the service will give Google experience with renewing paid accounts. For users who sign up for extra storage, Google will automatically renew their accounts after notifying them in advance.

Google’s foray into paid storage comes at a time when rumors continue to swirl about the company moving into new business areas. Talk of a Google mobile phone, or Gphone, persists, and Google on Thursday was linked to the digital music download business, saying it would provide ad services to a Universal Music Group program to sell DRM-free music.

The online storage of documents and applications alike appears to be a key part of Google’s long-term strategy to move computing away from the PC model that favors Microsoft toward a distributed computing model with online storage, Sterling Market Intelligence Principal Analyst Greg Sterling.

“Google would be the network and host most of the software,” Sterling told the E-Commerce Times. “Google and its allies would thus replace Microsoft as the primary computing platform, with the Internet swapped in for client-side applications and packaged software.”

That strategy is rife with risk, however, including the possibility of Google being seen as a less-than-benevolent force behind the shift and privacy concerns that arise form storing one’s personal documents on a corporation’s servers. Getting consumers comfortable with the idea of storing more and more information online may be one way to pave the way for that future, Sterling added.