Update: Bitcasa bursts its bubble

We first wrote about Bitcasa Infinite Storage back in February, and we amplified our kudos in a brief–but gushing–July update. In fact, lots of folks were impressed. The service model, home grown technology, smooth-as-silk founder, and jaw-dropping price point made for a very compelling story.

Infinite storage? Well, Yes…If you have an infinite bank account! Or at least, if you can accept uncapped cost. Surprise! Bitcasa users have been slapped with a 2000% cost increase. For Wild Ducks, only the future cost is “infinite”, obscene or just random.

Bitcasa (cartooned)We raved over Bitcasa in two past reviews, because they “get it”! At least they did before losing Tony Gauda, co-founder and prescient CEO. Bitcasa was a model for massive, private and always online storage with an unlimited ceiling and intuitive apps. We’ve used it ever since—discovering that a venture upstart can kick a*s with the big boys.

I use it with my own PC. Just this week, I expanded the number of folders that I mirror to their cloud servers. I am also relying on some very capable apps. The few glitches seem relatively minor (The Windows agent commandeers the lowest available drive letter, burns CPU cycles when idle, and has difficulty streaming several popular formats). But the company is responsive to these issues. Based on experience, I suspect that they will resolve the technical issues.

But, oh no! Here it comes: The cost of Bitcasa has ballooned. Not just any balloon, but a very elastic balloon. In fact, it looks more like a Blimp!

Users who signed up early this year (but after completion of the beta period) paid $49. We were warned that subsequent years would cost $99 (or less, for those who refer users). Now, we find that the subscription rate is changing from $49 or $99 per year to a slightly higher $999 per year.

Whazzit?! Come again?!!

The new pricing is effective immediately for newbies. From what I can tell, existing users may be exempt from the new pricing model—for now—but it’s not clear for how long. And, if these ‘grandfathered’ users want access to long anticipated features, such as a Linux client, they lose their privileged status. Even worse, the new plan limits the number of devices that can share a single data store. I can accept a device limitation when using iTunes. After all, the service streams licensed media under agreement from a publisher. But for the user’s personal data? The whole point is to support access from everywhere, I mean, c’mon!                                                                                  [Continue after photo]…

100 dolalrs

Next year, you’ll pony up 12 of Benjamins to store data in the cloud. At street price, you could purchase nine 4TB drives = 36 Terabytes

To be fair, early users recognized that the cost for subsequent years might be refined, slightly. After all:

  • The world economy might experience rampant inflation
  • The raw costs for storage and bandwidth might suddenly rise
  • Bitcasa may find that a high fraction of users are abusing the system or may actually store tens of terabytes. That would throw off a centralized storage model
  • Bitcasa may need a higher cost network architecture to enhance robustness

Guess what? None of these things happened! So, what would cause Bitcasa to screw over its devotees? Was the model unprofitable or unsustainable? I think not. Bitcasa de-dupes files while simultaneously encrypting user data. The technology is remarkably clever. In fact with the inevitable addition of a distributed, P2P storage architecture, the infrastructure costs drops by—oh—perhaps by 90%. RDDC can be incredibly lucrative.


How does Bitcasa explain away a startling blunder? By claiming that only 2% of users need more than 1TB and almost no one needs more than 5TB. Perhaps. But they overlook three things:

  • The higher price goes into effect at 1TB. Anyone with music, movies or years of photos will eat up several terabytes. At 5TB, users experience sticker shock. Hardly “Infinite storage”, Eh?!
  • Fewer than 2% of users may need more than 1TB today (a claim that is highly improbable). But what about tomorrow? Will those users trust that the cost will track the inherent cost of storage back downhill?
  • If very few people use multible TB, then Bitcasa leaves very little money on the table by sticking to its motto: “Infinite storage”. The iconic phrase conveys a powerful and visceral assurance. It is at the core of the platform’s market image and competitive positioning! Changing the rules without the need to do so triggers a vast and negative emotional response from the minions who proselytize on Bitcasa’s behalf, and future users who don’t wish to calculate their storage needs.

Why this? Why now?!

We’re still enamored with founder, Tony Gauda. He is remarkably smart and charming. Incoming CEO, Brian Taptich, is no slouch either! C’mon, Brian. No one expects you to give away service (even though it is exactly what Google does). But you needn’t rain on a parade that your team crafted with brilliance. You have an elegant and profitable model. If you screwed up on implementation, identify the cost overruns. Please fix the problem rather than killing the customer.

Honestly! You can redeem yourself and pull this one out of the fire… But do it quick. In the absence of dissenting opinions (I searched for quite awhile), here is a very typical consenting opinion.

—A loyal fan of the Bitcasa of yore