The Storage Conundrum
Are we seeing a simple case of supply and demand? Storage device costs are rising as a result of the intense demand from hyperscalers to support AI workloads.
Even consumer-grade and used market storage options have seen price increases, a three year old SSD model costs twice as much now as it did two years ago (looking at you Samsung SSD 870 EVO).
So What Will Happen?
I think it makes sense that the cloud vendors are going to start seeing the need to raise storage prices. While I don’t have any factual information, my intuition tells me their pricing is not modeled based on the cost fluctuations we’re seeing.
As enterprises grow their data lakes, and generative AI created mountains of new data to keep (and audit), I don’t see a future where the hyperscalers don’t see a crunch in storage and need to adjust their prices to offset the gap for keeping up with storage demand.
So the question to me is, in what form may we see this increase?
My Guess…
Right now, it’s my guess that we’re going to see a broad reaching increase per-GB of storage for the popular data lake options (AWS S3, Azure Storage/Blob Storage, even disks).
Someone will have to blink first (AWS, Microsoft, Google, Oracle) but the rest will inevitably follow suit.
I think companies will see their storage bills go up over 15% with a relatively short warning.
Unfortunately, there is not much escape. It’s not like many enterprises can snap their fingers and bring in storage, or substitute their S3 footprint more cost effectively than in “the cloud”.
Impact
Drain the Lakes
So you’re an enterprise, and you’re informed that in the following months, your cloud storage bill will go up 15%+.
What are your options?
- Pay
- Reduce storage consumption accordingly
So here’s where I think this is interesting enough to write this post about. For the companies that elect option #2, reduce storage usage.
Storage is Cheap - Everybody (pre-LLM boom)
If you’re picking up what I’m putting down, I think we may start seeing enterprises eschew the wonton data retention we’ve been seeing over the past decade. If you’ve been around long enough you’ve heard this more than once: “Storage is cheap”. The data lakes will start getting drained. To what extent, I couldn’t tell you; but it’ll be a function of how much of a price increase is to happen.
Data Strategy Recalibration
As companies become more cognizant of their storage consumption, they’re faced with actually having to think about their storage strategy due to big cost increases. They will do a long-overdue heart-to-heart evaluation about the data retention strategy and the underlying ROI.
The recalibration of their strategies to be more realistic with ROI expectations could fuel the data lake draining beyond more than just the cost curtailment from the cloud vendor price increases. As a result, we could see the demand curve shallow out pretty quickly.