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How To Add 5.5 Petabytes and Get Banned From Costco 273

Posted by timothy
from the you-need-the-executive-membership dept.
concealment writes with this extract from GigaOm: "'We buy lots and lots of hard drives . . . . [They] are the single biggest cost in the entire company.' Those are the words of Backblaze Founder and CEO Gleb Budman, whose company offers unlimited cloud backup for just $5 a month, and fills 50TB worth of new storage a day in its custom-built, open source pod architecture. So one might imagine the cloud storage startup was pretty upset when flooding in Thailand caused a global shortage on internal hard drives last year. Backblaze details much the process in a Tuesday-morning blog post, including the hijinks that followed as the company got creative trying to figure out ways around the new hard drive limits. Maps were drawn, employees were cut off from purchasing hard drives at Costco — both in-person throughout Silicon Valley and online (despite some great efforts to avoid detection, such as paying for hard drives online using gift cards) — and friends and family across the country were conscripted into a hard-drive-buying army."
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How To Add 5.5 Petabytes and Get Banned From Costco

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  • Wow (Score:4, Insightful)

    by taktoa (1995544) on Tuesday October 09, 2012 @09:55AM (#41596559)

    Unlimited storage for $5/mo? I have to get on this shit.

    • Unlimited storage for $5/mo? I have to get on this shit.

      Website says $3.96/m for unlimited data. Something tells me this business model will not survive without some serious bandwidth limitations. After all, if you upload is limited to 100mb then you ability to (non commercially) fill Terabytes of data is limited.

      • Re:Wow (Score:5, Insightful)

        by fuzzyfuzzyfungus (1223518) on Tuesday October 09, 2012 @10:25AM (#41596893) Journal

        Unlimited storage for $5/mo? I have to get on this shit.

        Website says $3.96/m for unlimited data.

        Something tells me this business model will not survive without some serious bandwidth limitations. After all, if you upload is limited to 100mb then you ability to (non commercially) fill Terabytes of data is limited.

        My impression(from friends who use them) is that they aim pretty heavily at home-user backup scenarios who are likely to be comparatively light users and have severely limited upstream bandwidth. They also don't do Big Serious SLAs and similar. Nor do they support things like backing up mounted NAS volumes or non Windows/OSX systems(I haven't check to see if the client is smart enough to recognize a mounted iSCSI device... It isn't exactly rocket surgery to distinguish a block device hanging from the Windows iSCSI initiatior from a block device hanging off the Intel whateverchipset SATA 2 port; but if you go with 'NAS = SMB/AFP" you'd miss it.

        Still, convenient and cheap, if not as robust as solutions that cost more.

        • by the_B0fh (208483)

          There was a photographer who wanted to backup terabytes of data, and they told him, sure. go ahead.

          • Ob python (Score:4, Funny)

            by rossdee (243626) on Tuesday October 09, 2012 @11:07AM (#41597389)

            photography eh?

            Nudge, Nudge, wink wink
            Say no more

          • by CastrTroy (595695)
            Go ahead is right. It's good publicity for them, and you aren't going to find too many people with a pipe big enough to upload terabytes of data. First you would need a pretty fast upload speed, which discounts most home users, and you would also need to be able to use a terabyte of bandwidth in a billing period, or space it out over multiple billing periods. They are probably already limiting how fast they accept data from any one upload. For every guy they find who wants to upload terabytes of data, th
            • by the_B0fh (208483)

              basically that's what they said. They asked him to stagger it over a period of a couple of months, but told him - $5/month, not a problem.

            • My pipe is rather slow, but it's more than fast enough to use move terrabytes of data upstream. Most pipes over here in Europe are big enough for that, same for Asia, don't know what the deal is for the States/Canada/Australia. The thing is, the first full backup of all that data might take a while, but once it's done you only have to worry about new data.

              I'm a photographer as well and I use Crashplan (they supported linux) and they're priced similarly (even cheaper I think). The application they provide
          • Re:Wow (Score:4, Interesting)

            by im_thatoneguy (819432) on Tuesday October 09, 2012 @01:33PM (#41599045)

            I have a RED camera which shoots 18megapixel raw photos at 24+ frames per second. Backblaze hasn't throttled me at all and I have 20mbps upload speeds.

          • Re:Wow (Score:4, Informative)

            by Bryansix (761547) on Tuesday October 09, 2012 @02:39PM (#41599877) Homepage
            Yes, I'm a photographer and I have 5TB of storage in my computer and I use Backblaze. I recently had a 1TB hard drive die (controller failure). So I began to restore to my ample space on my other drives. The problem I ran into is that the restore file only gets hosted for 7 days and then deleted. So in order to restore I have to break up the restore into smaller bites and download them one at a time. My other option is that they will ship me an external 1TB drive for $189. I'm not on my fourth file download of the restore. I'll get all my files back but its a serious pain.
      • by fm6 (162816)

        Website says that $5 with discounts for paying in advance. Though I'm sure you're right about bandwidth limitations.

      • by guruevi (827432)

        a) How much data do you really have?
        b) How much of it can be de-duplicated (they do data-center wide de-duplication)
        c) What is your upload speed?

        Realistically and I am a heavy geek user have:
        a) about 2TB (costs about $250 / 3 years today or $7/mo)
        b) around 18% (ZFS tells me so)
        c) 1Mbps

        Realistically most users have
        a) around 50GB (at the $250 for 2TB cost this is about $7 for the whole 3 years)
        b) around 25% (ZFS tells me so at work for ~300 home directories)
        c) 1Mbps or less

        So for the average user, the build c

    • Re:Wow (Score:5, Interesting)

      by vlm (69642) on Tuesday October 09, 2012 @10:10AM (#41596753)

      Unlimited storage for $5/mo? I have to get on this shit.

      Run the numbers. 50 TB a day sounds like a lot, if they've only got one customer. But they're probably got "a zillion" which would imply your very thin slice of the upload bandwidth is going to be choked to like a gig per day. The upgrade in my basement from (full) 1 TB drives to 2 TB drives took around overnight, less than 24 hours anyway, but over the net at a gig per day would be about 3 years to fully convert. Even if they're not limited I would have serious problems shoving more than 100 gigs/day thru my cablemodem, so thats at least 10 days.

      Another interesting thing to analyze is $5/month is $60/yr, so subtract $5/yr for electricity to spin a drive, assume a drive lives 2 years (probably much longer) that means if you can buy a drive big enough to hold everything you want for less than $110, just stick a drive in your basement. Better bandwidth and latency too, I have gigE at home but only ten or so megs of cablemodem. $110 at tiger direct will get me 2 TB. So 2 TB is approximately the tipping point, use less and you're better off "self hosting" in the basement, use more and you're better off using their service (and they're likely losing money if you use more than 2 TB).

      Also I'm curious if its "unlimited" like cellphone or internet access is "unlimited" in other words they'll cut you off if they're losing money on you.

      • House burns down? (Score:5, Insightful)

        by PeterM from Berkeley (15510) <petermardahl.yahoo@com> on Tuesday October 09, 2012 @10:28AM (#41596925) Journal

        A backup in your basement does nothing for you if your house burns down/gets flooded/has a catastrophic power surge/whatever.

        Where else can you backup offsite?

        --PM

        • by philipmather (864521) on Tuesday October 09, 2012 @10:40AM (#41597073) Homepage Journal

          I would say at your parent's house but this being slashdot that's probably not offsite.

          • Re:House burns down? (Score:5, Interesting)

            by xaxa (988988) on Tuesday October 09, 2012 @10:53AM (#41597201)

            I would say at your parent's house

            That's exactly what I've done. I set up some scripts to rsync data from my computer to a server in my mum's garage, and also the reverse.

            That way, we both have important data (mostly photos) backed up off-site in different cities, and the photos are available to browse through a web interface.

            but this being slashdot that's probably not offsite.

            A friend went with an encrypted backup program, and set up more-or-less the same thing with another friend.

        • by Albanach (527650)

          How about a neighbor. You could host a drive for them, they host one for you. Cheap wifi network connecting the drives to your networks. Encrypt everything you backup. You each have an offsite backup with reasonably fast connections.

          • yeah that is not a great plan to avoid having your data lost due to a natural disaster. flooding, wildfires, tornadoes, or hurricanes usually will not be localized to just your house in the neighborhood. off-site needs to be miles away at minimum, and ideally in another region.
        • by JazzLad (935151) on Tuesday October 09, 2012 @12:41PM (#41598491) Homepage
          3 words:

          Safe Deposit Box.

          I have 3 drives (that are archive only, not OS), 2 in my PC and 1 in my bank. Every couple weeks or so I take one out of my PC & swap it at the bank & update the bank's drive to mirror the one still in my PC. Cost is ~30/yr for the box except that I already had it for documents anyway (so no adtl cost to me).
      • by mrops (927562)

        I'm actually on CrashPlan which also offer unlimmitted, they haven't complained yet for about a TB of data. All you calculations are good, I have onsite backup as well, but I have digital photos of family/freinds for about the last 10 years which are about 150GB and then bought a 1080p camcorder about 4 years ago and that footage is already in excess of 500GB. So I really wanted an offsite backup to go along with backup on my NAS. 4 years of unlimitted storage costed me about $140 bucks. I am fortuante to h

      • by jeffmeden (135043)

        Unlimited storage for $5/mo? I have to get on this shit.

        Run the numbers. 50 TB a day sounds like a lot, if they've only got one customer. But they're probably got "a zillion" which would imply your very thin slice of the upload bandwidth is going to be choked to like a gig per day. The upgrade in my basement from (full) 1 TB drives to 2 TB drives took around overnight, less than 24 hours anyway, but over the net at a gig per day would be about 3 years to fully convert. Even if they're not limited I would have serious problems shoving more than 100 gigs/day thru my cablemodem, so thats at least 10 days.

        Another interesting thing to analyze is $5/month is $60/yr, so subtract $5/yr for electricity to spin a drive, assume a drive lives 2 years (probably much longer) that means if you can buy a drive big enough to hold everything you want for less than $110, just stick a drive in your basement. Better bandwidth and latency too, I have gigE at home but only ten or so megs of cablemodem. $110 at tiger direct will get me 2 TB. So 2 TB is approximately the tipping point, use less and you're better off "self hosting" in the basement, use more and you're better off using their service (and they're likely losing money if you use more than 2 TB).

        Also I'm curious if its "unlimited" like cellphone or internet access is "unlimited" in other words they'll cut you off if they're losing money on you.

        The number I am looking at is 50TB/day means 578MB/sec all day and all night (i am presuming there is some amount of day/night load curve). That's a lot of bandwidth for one organization.

        But more practically, what are you doing to generate all that content? Even a serious photographer/videographer would be hard pressed to generate more than 10GB of backup-worthy content a day, especially not averaged over a whole week or month.

    • Re:Wow (Score:5, Insightful)

      by wonkey_monkey (2592601) on Tuesday October 09, 2012 @10:20AM (#41596851) Homepage
      Who says Slashvertising doesn't work?
    • by poetmatt (793785)

      They have some kind of cap/quota concept, as well as a maximum amount of transfer per a specific amount of time.

      It's the not quite unlimited kind of "calling it unlimited anyway".

    • by fm6 (162816)

      That's fine, as long as you don't care whether your data is still there when you need to restore it. These guys are cheap because they're bucking the trend toward cloud storage for big data. Instead they're building their own "pods". Anybody who's doing manufacturing on that kind of scale needs to be a lot better at supply chain manageent. If they screw up something so central to their business model, what else might they screw up? How much redundancy do they offer? How glitchy are these home-brew NAS devic

  • Can't they just... (Score:4, Insightful)

    by grumpyman (849537) on Tuesday October 09, 2012 @09:56AM (#41596573)
    .. buy direct or maybe some wholesale? Is such deliberate effort worth the actual cost?
    • by oodaloop (1229816)
      Genius! I wonder why they didn't think of that?
      • by Zeromous (668365)

        Seriously. It was so bad the people who make the harddrives couldn't even buy them, from themselves at full price.

    • Obviously the answers are no and yes. They are likely way to small to buy direct and 1) get a good price and 2) even be given the time of day.

    • by 140Mandak262Jamuna (970587) on Tuesday October 09, 2012 @10:03AM (#41596659) Journal
      There was flooding in Thailand. Factories were disturbed. This company tried to grab as much of the drives already in the pipeline as it could.
    • by drinkypoo (153816) <martin.espinoza@gmail.com> on Tuesday October 09, 2012 @10:05AM (#41596695) Homepage Journal

      Costco gets such a good deal by buying in massive lots and handling distribution themselves that in fact it is worth the actual cost. I've been a costco customer off and on over the last few years and by remarkable non-coincidence I pretty much always check HDD prices. As well, I bought a pair of 1TB MyBooks when they were the big disk that Costco sold, and more recently I've bought a pair of 3TB GoFlexes. I like the return policy, and I can back up one disk to another (I disco the backup) and the two disks have very different service profiles so they're not entirely likely to die at the same time. And the prices were significantly lower than anything I could find from an even vaguely reputable retailer online.

      People have complained bitterly about how hard it supposedly is to get a disk out of a MyBook, I've never tried. I don't know anything at all about how hard it is to get the disk out of a GoFlex enclosure. But I do know that until very recently the prices on these external disks were actually better than buying internal disks online. I know (personally) a couple of people who went that route when building a desktop system, decasing externals from costco.

    • There we floods in thailand which significantly reduced the supply of hard drives. Some vendors responded to this by imposing buying restrictions, some imposed caps on the number of drives that could be bought. Many did both.

      You would think that vendors would try and get as much money as they can for their stock and to an extent that is true. However for something like hard drives the picture is more complicated. If someone can't buy a hard drive at a price they consider reasonable they won't buy the rest o

    • by Mashiki (184564)

      Good idea, but here's the problem. Even the chain suppliers like Ingram Micro, Supercom and so on didn't have any supply to sell during the shortage. That's why companies had to get creative to find a new supply of drives. When wholesalers don't have any supply for you, you need to find other places who have a supply and buy them anyway you can if you need them.

      Our shop was buying them in bulk from Walmart, Bestbuy/Futureshop here in Canada. Because we couldn't get any through our normal supply chain.

    • Another modded Insightful comment for someone who didn't read even the first paragraph of the corresponding article...

  • How does that company stay in the black? Whatever, just goes to show how creative some people can be to get around an obstacle.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      There's a link in TFA to an older article about them starting up and how much it costs them to run their storage: apparently it costs them $94,563 for hardware, space and power for a petabyte over 3 years. That's about $0.0026 per gigabyte per month, so if users are charged $5 per month then they just have to gamble that the average user is going to use less than about 1.9 terabytes per month.

      Obviously that doesn't include a lot of other stuff like wages, but you're still gambling that a user isn't gonna

  • by serviscope_minor (664417) on Tuesday October 09, 2012 @10:03AM (#41596655) Journal

    Seriously, what a bunch of assholes.

    So instead of doing the capitalistic thing and gouging with insanely high prices, the shops instead started rationing drives for a sane price so everyone could get a little bit of the very limited supply.

    That was actually a really good thing to do. Instead of profiteering, they tried to make the best of a bad situation for everyone.

    Then a bunch of dicks like this figure that they're more important than everyone else and that they should be able to get more than enyone else.

    Selfish bastards. Nothing but scum.

    After reading this I will not be giving them my money.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      Pretty much.

      Besides that, anyone that thinks they can run a company with this business model and survive is a business moron, or a scam artist trying to make a quick buck. This is 90's dotcom level idiocy at it's finest. Unlimited storage for $5/mo? Unlimited bandwidth too I guess? Completely 100% unsustainable.

      So I would expect slimy people like this to pull stuff like trying to scam more quantities of hardware than allowed. Getting friends and family to buy stuff? Uh, did you have them on payroll?

      • by donatzsky (91033)

        Besides that, anyone that thinks they can run a company with this business model and survive is a business moron, or a scam artist trying to make a quick buck. This is 90's dotcom level idiocy at it's finest. Unlimited storage for $5/mo? Unlimited bandwidth too I guess? Completely 100% unsustainable.

        Seems like it's you that's the business moron, as they're actually profitable. And until that $5M funding they got this year, they had been growing entirely through that profit. You can find all the details on their blog somewhere.
        Also, they're not the only ones to do this. There's also CrashPlan (and others I assume) that offer essentially the same thing at about the same price.

      • I would be very suspicious of a company whose business model depends on them getting a bunch of friends and relatives to buy as many hard drives as they can from Costco.

        WTF!!!

        If BackBlaze is a legitimate company that needs a lot of hard drives, why can't they just buy them from the various distributors/wholesalers. Where do you think Costco gets their drives.

        • by nedlohs (1335013)

          It doesn't.

          When there was a temporary disruption of hard drive supply chains, they noticed that external drives could be bought at costco for significantly cheaper than they could get internal drives from distributors/wholesalers. So they did.

          And they get a bunch of free advertising on slahdot out of writing about it too.

      • by nedlohs (1335013)

        It's perfectly sustainable. Their customers will use more and more storage as storage prices fall, and coincidentally they'll be able to buy the additional storage to back it up since prices will have fallen for them too.

        Yes they will lose money on some customers. As long as there are enough customers they make money on that's to cover it that doesn't matter. Every "all you can eat buffet" is making the same bet.

    • by Rob the Bold (788862) on Tuesday October 09, 2012 @10:51AM (#41597173)

      Seriously, what a bunch of assholes.

      So instead of doing the capitalistic thing and gouging with insanely high prices, the shops instead started rationing drives for a sane price so everyone could get a little bit of the very limited supply.

      That was actually a really good thing to do. Instead of profiteering, they tried to make the best of a bad situation for everyone.

      Then a bunch of dicks like this figure that they're more important than everyone else and that they should be able to get more than enyone else.

      Selfish bastards. Nothing but scum.

      After reading this I will not be giving them my money.

      The hard drive sellers weren't doing this altruistically. They made their call, figuring that rationing drives was the best for their businesses and best fulfilled their duty to their shareholders.

      The cloud storage company also did what they thought best benefited their business and fulfilled their duty to shareholders/backers/etc.

      It does not benefit us as individuals to assign a moral motive to the actions of a company. Whatever they do, it's for a business purpose. If it seems like one company is the good guy, it's just that that's what they think will help them return value to the owners. We must realize that they are all "selfish bastards" by the very nature of the capitalist system and not be fooled into personifying them.

      What I've written in no way implies that you can't spend your money wherever you want -- or withhold it -- based on anything you want to base it on. If you find a business' actions to be detrimental to society or just contrary to your ideals, you can certainly boycott them. In fact, I think you should boycott if you feel as strongly as you appear to. In this way -- if you're not alone -- those actions on the part of the company may turn out not to benefit the shareholders and therefore force them to change.

      You could also pursue a legislative approach, maybe convince your representatives that legal rationing is in the public interest. The US rationed commodities during wartime before, perhaps you can appeal that adequate storage space for all is sufficiently important for legal intervention.

      • by serviscope_minor (664417) on Tuesday October 09, 2012 @11:21AM (#41597587) Journal

        The hard drive sellers weren't doing this altruistically. They made their call, figuring that rationing drives was the best for their businesses and best fulfilled their duty to their shareholders.

        they almost certainly could have got away with upping the prices by much more than they did. They chose strict rationing instead.

        It does not benefit us as individuals to assign a moral motive to the actions of a company. Whatever they do, it's for a business purpose.

        And this is a real problem. They're just Soylent Corporations: made of people. It's the people that act. Pretending otherwise is an attempt to justify imorral action.

        Taking that to its illoigcal conclusion could lead to hypotheticals like

        Well, it's OK that they kidnapped babies, murdered them and sold them for dog food. It was a really cheap source of meat and so the profit margin was immense. Excellent for business.

        We must realize that they are all "selfish bastards" by the very nature of the capitalist system and not be fooled into personifying them.

        No: you have been fooled into believeing that companies act independent of people. They do not and they cannot. Only people can act and people can and do choose to do immoral things for money.

        The fact that they're doing it for money is no justification whatsoever.

      • by ColdSam (884768)
        That is a philosophical argument, not a practical one. Calling them "selfish bastards" is just shorthand for "companies who made business decisions I find to be unfair and/or evil." Then we treat them as such by punishing them in the market (or legal system). Without that feedback mechanism we would devolve into the baby killing/eating scenario posted by another.
      • by ultranova (717540)

        It does not benefit us as individuals to assign a moral motive to the actions of a company. Whatever they do, it's for a business purpose. If it seems like one company is the good guy, it's just that that's what they think will help them return value to the owners. We must realize that they are all "selfish bastards" by the very nature of the capitalist system and not be fooled into personifying them.

        This would be true if companies were manned by robots, but they aren't. A company is just a lot of human be

    • by fermion (181285)
      Shortage of materials is really hard on direct to consumer retail. They have stock which they pay warehousing and interest on, so it usually costs more whcih consumers are are not buying at commercial quantities are willing to pay. OTOH, they expect for a retailer to have stock, so consumers get really annoyed and shop elsewhere. While commercials interests do have choice of where to buy product, most consumers are limited to retail outlets, and Costco is one of the few places that allow consumers a large
      • by tlhIngan (30335)

        Shortage of materials is really hard on direct to consumer retail. They have stock which they pay warehousing and interest on, so it usually costs more whcih consumers are are not buying at commercial quantities are willing to pay. OTOH, they expect for a retailer to have stock, so consumers get really annoyed and shop elsewhere.

        Not to mention that this was also during the busy holiday season, to hard drives were going to sell no matter what as they got gobbled up as presents. Costco decided it would be bet

    • by 0123456 (636235)

      That was actually a really good thing to do. Instead of profiteering, they tried to make the best of a bad situation for everyone.

      Uh, no. It would be a really stupid thing to do.

      Raising prices means that people who don't really need a drive right now wait for prices to drop, so the users who are willing to pay the higher prices to fulfill real needs can still buy theirs. Rationing means that a company which needs drives today in order to grow its business can't buy them because they're being sold below market price to Joe Sixpack who wants a bigger drive to store more downloaded pr0n.

      • by ultranova (717540)

        Raising prices means that people who don't really need a drive right now wait for prices to drop, so the users who are willing to pay the higher prices to fulfill real needs can still buy theirs. Rationing means that a company which needs drives today in order to grow its business can't buy them because they're being sold below market price to Joe Sixpack who wants a bigger drive to store more downloaded pr0n.

        Being able to outbid Joe does not mean that you need the hard drive more than him, it just means t

    • by Theovon (109752)

      You now have a new fan. I wish more people thought like you and considered what they SHOULD do, ethically, in priority of what's merely LEGAL (or not legal as the case may be). If more people thought like you, then we'd have fewer stupid laws restricting everyone's freedoms on the basis of the selfishness of a few. Thank you for existing and having the willingness to point out that just because something's allowed doesn't mean it's right or doesn't have consequences for other people.

  • Skip the blogspam (Score:5, Informative)

    by maztuhblastah (745586) on Tuesday October 09, 2012 @10:03AM (#41596667) Journal

    Hear the story direct from Backblaze [backblaze.com] (bonus: goes into more detail).

    • by AlgUSF (238240)

      I like how they link to the article about how they build up their pods. Really cool info for the novice storage builder trying to put something similar together for their small enterprise. Enough information to get you going, enough redacted so that you actually have to DIY.

  • I don't get it (Score:5, Interesting)

    by JobyOne (1578377) on Tuesday October 09, 2012 @10:06AM (#41596701) Homepage Journal

    I'm confused. Was Costco selling these drives at a loss or something, just to get people in the door?

    I can't think of many good reasons that they would look at customers coming in and buying assloads of their merchandise and say "NO! Get out of here and don't buy stuff from us ever again!"

    • Re:I don't get it (Score:5, Insightful)

      by xlsior (524145) on Tuesday October 09, 2012 @10:14AM (#41596791) Homepage
      Many companies reserve the right to limit quantities. Making one customer happy by selling them every drive in stock means ticking off hundreds of others that wouldn't be able to buy the single drive they need.
      • Re: (Score:2, Informative)

        by Anonymous Coward

        Maybe they just wanted to prevent racketeering: a company buying up a temporarily rare commodity (making it even rarer) and reselling at a huge mark-up. Maybe Costco thought this unregulated free market needed some self regulation to help it remain healthy.

    • Re:I don't get it (Score:4, Insightful)

      by Anonymous Coward on Tuesday October 09, 2012 @10:15AM (#41596805)

      I'm confused. Was Costco selling these drives at a loss or something, just to get people in the door?

      I can't think of many good reasons that they would look at customers coming in and buying assloads of their merchandise and say "NO! Get out of here and don't buy stuff from us ever again!"

      A valid question, but one which some logical thought should provide an answer to... I'd suspect Costco prefers to have many content customers (a customer who ends up at an empty shelf every day is going to go elsewhere, potentially even for other stuff) than one deliriously happy customer. The profit margins on those things are going to be minor anyway, so its not Costco were raking in the profits by selling all their harddrive stock. Presumably, this added profit did not offset all the other customers being unhappy with Costco that they couldnt buy they harddrives they advertise.

      • by PPH (736903)

        'd suspect Costco prefers to have many content customers (a customer who ends up at an empty shelf every day is going to go elsewhere, potentially even for other stuff) than one deliriously happy customer.

        Costco is notorious for getting a container load of something and putting it up on the shelves until it runs out. And then never carrying it again.

        Supposedly, they cater to small businesses who need a consistent supply of certain items. Think of a restaurant putting something on their menu based on ingredient availability. Unless its their Kirkland brand whatever, their selection is inconsistent.

      • Costco has a corporate policy that limits revenue from sales to 10% above their cost. This 10% covers their overhead costs (buildings,employees, distribution, etc). 100% of Costco's profit comes from their membership fees. Depending on the amount of fuel sold per quarter they may turn a very small profit on this 10% or they might not.

        Costco has NO profit incentive to sell one customer more of a product if that means pissing off other customers. Their profits come almost exclusively from membership fees, hen

        • Costco generally limits markup to 15%, not 10%. Also, certain state laws require that Costco apply minimum markups to the selling prices for specific goods, such as tobacco products, alcoholic beverages, and gasoline. Of course, some products are marked down for quick sale. However, the resultant average gross margin target is around 10%.

          They do, however, attempt to control their SG&A (overhead) to match their gross margin target of 10%. The net corporate profit is from membership fees which is why

        • by tonywong (96839)
          Got this from MSNBC:

          Costco works to keep prices low by buying in huge quantity and never marking up any product more than 15 percent, less than the typical 25 percent at a supermarket or 50 percent at a department store. Costco makes up for those low margins by charging a $55 annual membership fee of its 64 million members. With more than 90 percent of its members renewing each year, the fee is evidently not a significant deterrent.
    • Re:I don't get it (Score:5, Insightful)

      by localman57 (1340533) on Tuesday October 09, 2012 @10:19AM (#41596845)

      I'm confused. Was Costco selling these drives at a loss or something, just to get people in the door?

      There's a difference between selling at a loss, and selling below market value. For instance, if Costco signs a contract for delivery of a million drives in Feburary, the factory floods in March, and Costco gets delivery in April, their drives are suddenly worth substantially more. They can either sell them at the previously intended prices, or they can raise prices to market value. In the first case they still sell them for more than they paid, but less than market value. In the second case, they take the customer for all they're worth, and make much more profit. Rationing is the only way the first one can work, otherwise someone will come in and buy all your drives, then resell them at market value.

    • It was not that the drives they had were more expensive for them to purchase it was just that they could not get very many of them.
      So they limited how much each person could buy instead of profiteering and raising prices so only the rich could afford them.

    • Costco likely purchsed the drives when they were available in bulk at low prices prior to the shortage. The clowd providers were buying drives as needed. Keeping inventory low.
    • I'm confused. Was Costco selling these drives at a loss or something, just to get people in the door?

      There was a delay in the pipeline. Like, all factories shut down due to natural disaster (Tsunami). Therefore, Costco (due to buying in bulk) and a few others had a supply that had to be stretched. Instead of raising rates to match the new supply with demand, they imposed caps on how many each customer could buy. Many other companies did so as well (Newegg for instance).

      Now that the supply line has been

    • There was a flood in thailand, this meant supplies of hard drives were massively reduced. Stockists of hard drives were left with three choices.

      1: Crank up the price until demand came down to meet supply
      2: Put restrictions in place to stop one customer buying too many, possiblly in combination with smaller price increases.
      3: Do nothing

      Whichever choice is taken some customers will be pissed off. Choice 1 is likely to be the most profitable if only hard drive profits are looked at. However if people consider

    • I don't know what the case was with Cosco in this instance, but sometimes it's better business to please many customers with small orders than to please 1 customer with a huge order. Even if it comes out to selling more drives in the short term, if it means developing a reputation from your regular customers for not having what they need, it may not be good for business to sell out.

  • 3.96$ a month... (Score:4, Interesting)

    by geschild (43455) on Tuesday October 09, 2012 @10:14AM (#41596789) Homepage

    ... is pretty cheap (5$ is for a family account). But as BB itself says, you can only upload 2 to 4 GB per day.

    They should be making a mint on that service! They use home-brew storage pods and are very open about it, too!
    http://blog.backblaze.com/2011/07/20/petabytes-on-a-budget-v2-0revealing-more-secrets/ [backblaze.com]

    Anyway, be careful to read all the gotchas:
    http://www.backblaze.com/remote-backup-everything.html [backblaze.com] (hint: 'everything' for a certain definition of everything. No virtual machines, ISO's and NAS storage by default.)
    http://www.backblaze.com/internet-backup.html [backblaze.com] (hint: not all OSes are treated equally.)

    (Full disclosure: I work for a storage manufacturer that sells de-duping storage so I think I understand their cost model a bit better than most.)

  • Internet Archive (Score:5, Informative)

    by dr_leviathan (653441) on Tuesday October 09, 2012 @10:28AM (#41596929)

    Several months ago I met someone from the Internet Archive (archive.org) who told a similar story. The weren't expanding their storage at the same pace as Backblaze, but they were also resorting to shucking external drives to build their rack mounted servers.

  • The whole concept of online file storage makes no sense. Especially for consumes and especially in the U.S. where speeds are slow and costs are high. Getting your data into the "cloud" is extremely slow due to the fact that all ISPs severely restrict upload speeds. Then, once you finally get it all uploaded, getting it back will be difficult, even if you are fortunate enough to live in an area with decent speed, because you are probably one of the many millions of people whose only choice for broadband i

    • It actually makes good sense as part of a complete backup system.

      What happens to your data when your office/house/whatever with the 2 or 3 TB drives burns down with them in it, or someone breaks in and steals your desktop and the USB drive you left sitting on top of it?

      Depending on the circumstances, I usually recommend RAID of some kind if possible, a USB/External Hard Drive on-site, and then some kind of off-site backup.

      If your internal drive dies, if you had RAID, you just replace the dead drive.
  • If you're interested, they open sourced their hardware a few years ago.

    http://blog.backblaze.com/2009/09/01/petabytes-on-a-budget-how-to-build-cheap-cloud-storage/ [backblaze.com]

  • More of a feature than a bug.

  • I hear stories like this all the time, though they rarely pan out. Granted, it is slightly more likely at a warehouse club where you need a member ID to make a purchase, but it still doesn't seem that likely. I'm no particular fan of costco, but I would love to hear their side of the story.

I have never seen anything fill up a vacuum so fast and still suck. -- Rob Pike, on X.

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