Disk Space as Currency: Symform Aims to Leap Ahead in Cloud Storage

9/10/12

Data centers are so 20th century.

That’s the postulate, anyway, at Symform , a Seattle data-storage startup that uses more space on its customers’ hard drives to create a virtual data center online.

The company was started by a pair of ex-Microsofties, and last year hired former DocuSign CEO Matthew Schiltz to address a better stage of its growth. And in a market crowded with names like Amazon Web Services, Box, Mozy, Carbonite, and plenty of more, which means some sharp-elbowed competition.

Symform’s technology has always stood out in that very crowded field. Most storage companies aggregate a ton of knowledge center capacity and earn money by charging for storage and related services. Symform, then again, uses the web to corral the equivalent of a data center by storing data in slivers of accessible space on a bunch of people’s hard disks.

So, in the event you join the network, you’re also asked to let Symform use a number of your available disk space to pack away a tiny piece of encrypted data from someone else.

That’s a pretty intriguing idea, and it has been enough to attract around $16 million in venture investment , from the likes of WestRiver Capital, OVP, and Longworth Venture Partners. Symform also says it has attracted tens of thousands of users in 150 countries.

But in a market chock packed with competitors offering relatively similar services, competition often comes right down to price. And, even as, a network like Symform’s works as a competitive business only when it gets a huge amount of users.

That brings us to today’s announcement that Symform is lowering prices for its storage service, with a new fee structure which may mean free storage for some customers. If a customer contributes twice the quantity of space for storing that they use, they may store their very own data at no cost-Symform calls this paying with “bytes” as opposed to “bucks.” Users may also buy storage at the network, at a rate of 15 cents per gigabyte.

Schiltz says research and tests with customers show that users are occupied with the premise of much lower prices, whether or not that implies contributing extra space than they use. I guess that is smart when you consider how inexpensive raw storage capacity is on a one-off basis.

“The economics are not making sense for the user should you take into consideration buying a 2 terabyte disk drive for $80, after which paying someone $500 a month to back it up,” he says, citing per-gigabyte prices from competitors like Mozy.

So how can Symform generate income if it’s freely giving storage? It’s following the freemium model that’s being employed in such a lot of Internet businesses. When you can build enough of a user base, there are lots of more options available for a business to make some revenue-particularly on support, for that reason, but potentially including other options that haven’t been rolled out yet.

And it has got to work that way, since early customer tests have left Symform expecting that the majority of its users pays for his or her storage by offering up disk space in place of paying per gigabyte.

The endgame this is growing the volume of online data storage. Because it stands, Schiltz says, many businesses use a “lifeboat” approach of backing up only their most crucial data caused by the expense.

“So to illustrate you’ve a terabyte of source data. You are trying to locate a way to just store 100 gigabytes or 200 gigabytes within the cloud because it is so expensive,” he says. “We think that fundamentally, you want to back up and store all your data within the cloud. Our customers trust that-they simply need better economics.”

Curt Woodward is a senior editor for Xconomy. Email: cwoodward@xconomy.com

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