Bitcasa made headlines when their service promised to free users from the constraints of using a typical hard drive. Bitcasa got its start by proclaiming that it would store as much data as a user could upload for around $10 per month. To many users, this number seemed unrealistic. After all, how could Bitcasa make any profit selling unlimited storage for this low of a price? Bitcasa seemed to wise up and raise its unlimited storage account to $99 per month which seemed reasonable to some users. When you think about it, if you’re the company who sells unlimited cloud storage space, it makes sense that you will be the vendor that attracts users who require the most space for their files.
That’s exactly what happened. Bitcasa CEO Brian Taptich recently conducted an interview with GigaOM highlighting his companies recent troubles in regards to delivering unlimited cloud storage services. Taptich was quoted as saying, “One user who was storing 82 terabytes of data was costing the company around $3,000-$4,000 a month.” It doesn’t take math genius to understand that several customers who fit this profile could potentially bankrupt a cloud storage provider.
Taptich went on to say, “It’s not fun to stare at your earliest and largest users in the eye and say ‘we just can’t do it anymore;’ It’s a terrible feeling. You wish you could subsidize those [customers] forever.” On top of all of this, one of Bitcasa’s biggest assets became its biggest liability. Because Bitcasa uses a proprietary encryption method, all of the data on Bitcasa’s servers looked the same. When it came time to begin doing data migrations, it was difficult for Bitcasa to differentiate which data belonged to which customer. Taptich mentioned, “When it came to time to migrate, we didn’t know what to migrate; I don’t know what’s in there or what’s not.”
The pivot from unlimited storage was necessary for Bitcasa to stay afloat. One disgruntled user sued Bitcasa over its pivot to no longer offer unlimited cloud storage services and in court, documents showed that Bitcasa’s current model was unsustainable and that its current pricing structure was “likely to push Bitcasa into bankruptcy within weeks, if not days.” Taptich reminds Bitcasa users “The roadside is littered with the carcasses of people who’ve tried fixed-fee all-you-can-eat services and we aren’t trying to be one of those failures.”