SugarSync Move to Paid Storage Signals Shift Away From Cloud Freebies

NEWS ANALYSIS:  SugarSync's plan to charge for online storage is likely only the first in what may become a rush to end the "Freemium" model for providing cloud services.

"Companies need to build a sustainable business model," Alan d'Escragnolle said, explaining why SugarSync was dropping the company's free data storage plan.

d'Escragnolle, who is SugarSync's vice president of marketing, told eWEEK that the company's current free customers would be offered the chance to upgrade their accounts at a 75 percent discount. He also said that if SugarSync users chose not to upgrade their accounts, they would lose access to the data they'd stored there as of Feb. 8, 2014.

d'Escragnolle said that while most of SugarSync's business is already aimed at small businesses and users who buy professional-grade services, a consumer-focused free storage service wasn't sustainable over the long run. "The freemium model works best when costs are low and there's a high conversion rate to paid services," he said. "But with storage it's just the opposite." d'Escragnolle said that storage can be very expensive.

Perhaps more telling, d'Escragnolle told eWEEK that he expects that a number of other freemium services will transition to a paid model in the near future. Freemium services are services in which a limited number of features are provided for free, with access to more advanced services available for a fee. These services make money by enticing users to upgrade their accounts by making the upgrade very attractive.

d'Escragnolle also said that SugarSync wants to make its user experience better, and to do that it can't afford to give it away. "We need an awesome user experience," he said.

The world of storage services abounds with companies that either give their services away for free or that migrate to a cost model only for very large storage needs. Some online data storage companies, such as Microsoft with its SkyDrive platform, provide their services for free as a way to attract customers. For example Microsoft uses SkyDrive to promote the sale of other Microsoft products such as Windows 8, which integrates with SkyDrive. But there are plenty of others that have few differentiators and even fewer ways to make a profit.

Of course this does not mean the complete end to free services. SugarSync still plans to offer 90 days of free storage for 5GB of data as a free trial. Small businesses can sign up for 60GB of free storage for 30 days. The idea is for potential customers to see if the service works for them. But as SugarSync's Dec. 10 email to customers explained, users will either have to find another place to store their files, upgrade to a paid account or lose access to their data.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...