I fully agree with Josh about the complexities of large-scale online storage. We have been working on our backend storage server for almost 2 years now and we have tackled some of the problems that Josh outlines, and have developed similar solutions. Our costs are also much lower – the storage costs we reduced with our backend technology and the bandwidth costs we reduce with smart business deals. Amazon launching S3 was great because everybody is talking about how ‘low’ the price is and that their pricing is already killing most of the hosted storage companies – I can say that our costs are significantly lower than what Amazon are charging, so it confirms that our approach to a solution by focusing on building a more efficient backend is what will keep us alive and able to compete with the big companies, while the plethora of startups who have built nice interfaces to common server storage will pass away.

I can not say much about what the cost structure looks like for the other startups out there, but the common and average price points out there at the moment are just far too high for mass-adoption to take off. So these guys are either making a lot of money, or don’t have a sustainable long term model. From what I know about Josh and Mozy it is apparent that they have the backend model and cost structure nailed well. How other companies like box.net, streamload, openomy, strongspace and xdrive look on the backend and what their costs are I can only speculate – but they are either making a lot of money, or don’t have a long-term model.

The problem for the companies that do have the technology right and have solved the more difficult problems in developing a good online storage solution is that our strengths will only be demonstrated by waiting for the market to shake-down. Having good backend technology can not be directly demonstrated to the consumer, and they don’t really care, but it will be demonstrated when we see online storage priced much more reasonably (I don’t want to reveal what we think online storage will cost for consumers).

This was a good post Peter, I will send you an invitation to try out Omnidrive – I would love to hear your thoughts on it. As a final note, just to clear something up, I started writing for Techcrunch and started Talkcrunch with Michael months after he first wrote about Omnidrive. After talking to him about online storage last year we became friends – so there is no influence over his opinion or his posts.