Why is Google giving free 1 TB cloud storage?😱
The insight that makes Google a money making machine 💸
Welcome to the 94th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Google last week announced that it is going to give you free 1TB storage from now on. In Google’s words - you don’t have to lift a finger to get the upgraded storage.
Quick look at the last 20 years 🗓
Back in 2004, when Gmail first launched, it offered only 1GB of storage space, a significantly higher amount than competitors offered at the time. Fast forward 2013, when it rolled a freaking 15GB storage for users worldwide.
This has been both a boon and bane. On one hand where users did enjoy 15GB of storage on their emails account, with the growing digital dependencies, it wasn’t enough. We’re now sharing documents, PPTs, images, & videos more than ever.
So, users resorted to different techniques, the most common one being creating multiple Google accounts. Oh come on, we all have done it ;)
Out of 1.8 billion Gmail accounts, only 6 million are Google’s paid Google drive users, roughly 0.3% conversion. That’s pretty shitty if you ask me.
Most of these paying customers aren’t individuals but organisations. Plus, the biggest competitor in the same domain, Dropbox has more than 700 million registered users, 15.48 million paying users.
The first 10 years of Google Drive was focused on increasing your Google products usage(photos, Gmail, maps & more). The more you use google for anything, the less you use any other competitor, classic exit barrier strategy.
So, why is Google giving storage for free, now? 🤯
Welcome to the concept of switching cost. By definition, switching cost decides if the user would decide to continue using a specific product or use a substitute product. Hard to follow? No stress.
Go back few moments, Google’s free to paid conversion rate is 0.3%, most users open multiple Google account and try to avoid paying for storage. Users are essentially trading time with money by spending hours in creating new Google accounts and maintaining them.
What happens when all these users use 1TB of storage?
First, most users will stop creating multiple accounts. Second, most will just sync their photos app with one Gmail account. Third, it will become the only storage most users start using.
But, what if, just what if, Google decides to pull back the 1TB free storage?
Most users will not take the trouble of going back, even if they decide to go back, they can’t. Imagine if the account hits the 1TB limit and then the user wants to transfer 1TB storage into a 15GB plan, they’ll need approx. 66 gmail accounts.
Ofcourse, not every account is going to hit the 1TB limit but it’s fundamentally going to be high friction point to go back from Google Drive paid plans. And that’s the long term monetisation play Google is into.
And, now you know the Google free storage story
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