Google  just cut the cost of additional storage for Picasa & Gmail from $20/year for 10GB to $5/year for 20GB, and now you can buy up to 16TB of storage.

This service is targeted at end-users, and it is limited to Photo storage on Picasa, and mail storage for GMail, but people suspect that it will be expanded at some point to provide more general purpose storage, which seems like a no-brainer once ChromeOS is released.

It doesn’t compete directly with Amazon’s S3 cloud-storage, which is mostly targeted at developers, and can store any file, but I have to wonder if Google’s move isn’t going to force Amazon’s hand on storage pricing.  Amazon may not compete directly with Google in this regard, but a lot of Amazon’s customers are, in one way or another.  Google’s old pricing was somewhat higher than Amazon’s, which left developers with room to use Amazon’s storage to compete with Google.  The new Google pricing totally inverts that.

Amazon’s pricing is due for revision anyway.  Cost of raw storage have declined significantly since S3 debuted, and I’m sure Amazon has been able to lower their operating costs significantly as well, but these savings haven’t really been passed along.  They cut their prices somewhat a year or so ago, and instigated a tiered pricing scheme that rewards large customers for growth with declining marginal costs for storing more data, but the new Google pricing takes things to a “whole nother level.”

It’ll be interesting to see whether S3 and other “cloud” storage providers, and the applications that build on them are about to follow suit.

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