09
Jan
Freemium vs. Paid: Α different perspective on Cloud Storage
Posted on January 09, 2013
Freemium vs. Paid: Α different perspective on Cloud Storage

As the founder and CEO of Avandrive, people often ask me whether I am worried about competition from the likes of other competitors. The answer is no – and I’ll explain why.

 

Avandrive focuses on the prosumer and business user. We like to think of ourselves as the “professional man’s cloud drive”.  We are aware that there is a huge gap in the cloud storage market and business is booming. Let me explain how it works…

 

 

Freemium is great, if you’re a free user…

…but not so much if you’re paying! The fundamentals of a freemium model are such that the paying user must pay for the free users.

 

 

For example, with Avandrive Home Storage you get 512GB of space for just €7.50 +VAT per month. Others, for the same price, offer just 100GB.

 

 

Paid-for services, like Avandrive, can offer far better deals to paying users because we don’t have the cost of servicing millions of free users. When you have a freemium model you have to set the usage bar for paying quite low in order to make the numbers work… and the price has to be high because only a small percentage of users will choose to pay.

 

 

Paying for some other competitors that also offer free small storage packages is like paying tax. Our message is simple – by all means enjoy a free service if it meets your needs, but if you’re going to pay, then join a paid - for service like Avandrive.

 

 

Are you a PROsumer?

 

VCs and marketers often talk about prosumers. Common descriptions for prosumers include ‘discerning, smart, advanced, professional, knowledgeable, early adopting’ people. I guess on this basis we’d all like to be considered prosumers as opposed to mere consumers.

 

Personally I believe when people use the term ‘prosumer’ they normally mean ‘early adopting’ or ‘ahead of the market’. It’s not that prosumers are smarter or have more money – it’s just that they have more knowledge in a certain market than the majority of people.

 


 

The widening gap

 

Back to that gap in the market I was talking about. We’ve already established that many consumers use the free services. Large corporate companies will use custom solutions provided specifically for enterprises. So what do small businesses and professional users use? Mainly free services.

 

 

Why? Because despite of being millions of small organizations worldwide, they are unloved in the Cloud Storage market; uncared for; left on the street while trying to squeeze their business around a consumer solution.

 

Few cloud storage companies have taken the time to build good value and feature rich, easy-to-use services for this market. That’s why small businesses use the free services, because they are more accessible and there are limited other options. That’s where Avandrive fits in.

 

 

The precedents are clear

 

I started my career in web developing and web hosting when most small businesses and individuals did not have a website. When I first started my business in 1999, most people thought web developing and web hosting would be a free service –  some companies were offering free hosting and it wasn’t unusual to find professionals and small businesses alike using them. Then, as the market matured, the word on the street was that ‘only prosumers will pay for web developing and web hosting’. What actually happened is that as the Word Wide Web grew, people’s needs grew with it and users started having all sorts of preferences – in the case of web hosting that meant things like support, speed, domain names and server features etc. Now, even a home user who just wants a website to help him find his favorite place for holidays will most likely be using a decent, good value, paid - for service as opposed to a one-size-fits-all freebie.

 

 

Cloud Storage is a super-fast growing market. I believe that soon enough all our data will be transferred online and the question of “who’s your cloud storage provider?” will be as common as “who’s your ISP?”. And by the way, ISPs are another great example of a service that started out as free and then matured into a decent service once the market increased.

 

 

Conclusion

 

At the moment, if you believe that some cloud storage companies offering free services may be a good bet for you, then think again because the future of storage technologies is not far. Just like technology changed the way we used to save our data in Floppy disks, CDs and then USDs, soon enough it will force us into becoming cloud users. As a matter of fact it has already begun as the new computers without HDD memory have made their appearance in the US market.

 

Therefore, if you are planning to move your data into the cloud, you have a fantastic provider right in front of you that offers you the opportunity to be within the pioneers that anticipated this change and not only bought the cheaper service but also made millions out of it.

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