that potential customers might be skeptical of Wasabi. “The offer itself sounds so counterintuitive that a little startup in Boston could be more cost-effective and higher-performance than a giant company like Amazon,” he says.
But he thinks Wasabi’s prices are so low that businesses and organizations will be willing to at least give it a shot, if only on a trial basis or as a second backup for their data.
“People will say, ‘Who the heck is Wasabi, and why should I trust you?’” Friend says. “But that’s why I think the marketing is important. I’m a firm believer in building a trusted brand, just like we did at Carbonite.”
Friend thinks Wasabi could be particularly attractive for users that are storing huge amounts of data and need to access it quickly for analytics or other computing tasks. He gives examples like genomics research labs, film studios, police departments storing video from body cameras, and social media startups.
Ultimately, Wasabi is trying to help turn cloud data storage into a commodity, like electricity. That means that it will not only be cheap, but also standardized, Friend says. His analogy is that there aren’t three different outlets in the wall for plugging in devices—with “good,” “so-so,” and “crappy” electricity output—there is just one outlet that kicks out the same voltage.
“Right now, we’re in the Betamax versus VHS wars, with each vendor trying to lock you into their own proprietary cloud,” Friend says, using another analogy (which will sail right over the heads of most people born after 1985). “I can’t see that continuing forever. … Eventually everybody’s going to decide on one language for cloud storage.”
The effect, he says, is cloud vendors will “compete on price and performance. That’ll drive down costs and be good for the consumer.”
But can Wasabi build a strong, profitable business with such low prices? And could it survive a price war with Amazon, the king of low prices and profit margins? “We make good money at this price,” Friend says. “But commodities in general reward those companies that are most efficient and can produce the best product at the lowest price. That’s the way I want to compete.”
Wasabi is betting that Amazon and other big cloud storage providers won’t “drop their price by 80 percent,” Friend admits. “That seems highly unlikely,” he adds.
But the cloud storage price war has already begun. IBM, Amazon, Google, and Microsoft have all cut their prices in recent months, according to a new report from 451 Research. The firm notes that there “is little data suggesting cloud is anywhere near a commodity yet.”
Rubin, of ClearSky, says it’s possible that Amazon could develop a competing product that is as cheap and high-performing as Wasabi. Amazon rolled out over 1,000 new features for its cloud services last year, she points out. “You always want to be thinking very hard [about], is the white space that exists going to exist in a year or two from now?” Rubin says. “It isn’t that [Amazon would] just try to retrofit S3. The question is, would they build something new if they see demand for it?”
In the end, Wasabi’s prospects come down to how good its technology is and how efficiently it can run the business, Rubin says. And it will take time to build a successful, large company.
“The trick always is the software taking advantage of the [data center] hardware in ways that it’s never been done before,” Rubin says. “But it’s really hard for a startup to do anything on a massive scale, fast.”
