Google could strike gold in Online Storage Market

Research company iSuppli believes that economies of scale can help Google become a worthy competitor in the online storage market.

In a paper published on the 10th of December, Krishna Chander, senior analyst, storage systems for iSuppli says that Google could grab a much higher margin than companies actually selling hard disks.

Google stands at making a whopping 75 percent gross margin compared to a 18 percent gross margin for a traditional hard drive manufacturer.

Chander estimated that if 4.2 million users - a fraction of Google Users worldwide - use Google's online storage system regularly, this could generate about USD 210 m annually thanks to advertising (assuming that each user generates 14 cents daily).

The analyst estimates that it costs the search giant roughly USD 250 per Terabyte, a price that goes down each year as technology drives down prices.

But there might be pitfalls and uncertainties as well concerning security, privacy and reliability.

The fact files could be accessible from anywhere in the world simply using a login and a password combined with the necessity of a broadband connection, the omnipresence of Google and targeted adverts could make some users nervous.

But it also shows that there's a market for hardware manufacturers like Seagate, Toshiba or Hitachi to explore as a way to add value to their product line, especially as others like EMC and IBM are quickly entering the online storage market.