Yahoo recently announced that users of Yahoo Mail will receive free unlimited email storage starting in May 2007. While that’s big news in the world of web email and catapults Yahoo temporarily in front of Google, there are much bigger implications of the move.
The cost of storage is continuing to drop dramatically. Yahoo is essentially acknowledging the fact that incremental storage costs are more than offset by the incremental revenues from services such as advertising.
Free unlimited storage is being further commoditized. Pretty soon we’ll have free unlimited storage for everything we do online – email, photos, videos, blogging, etc. Google and Microsoft will follow suit soon. This poses a great challenge for all the startups in the market. The big boys can live off scale, but startups have to find innovative ways to drive revenues up so they can survive.
The battle will ensue for owning our data assets. Storage limits will no longer be a differentiating factor. Lowering the cost of change along with value-added services will become more important than ever.
