How Much Does a Petabyte Cost: On-premises vs. Cloud Storage Pricing

September 15, 2022By Andrew Smith

Market context: growth of cloud storage services

Shared, multitenant (i.e., public) cloud storage services continue to snowball. The most recent market forecast figures from analyst firm IDC estimate the IaaS Storage market will grow at a 24.8% five-year CAGR, reaching $114 billion by 2026*. Given this growth and seemingly massive market size, it’s safe to say there is ample opportunity for continued expansion of cloud storage services. So what is driving this market growth? We see three key trends contributing to market expansion:
  1. Enterprise data growth: On average, organizations should expect their storage footprint to grow 30-40% annually. Organizations are gathering more data than ever as devices, applications, and other data sources increase. Couple this with the need to store more of this data to inform short and long-term business initiatives, and the result is skyrocketing previous capacity requirements.
  2. Ongoing migrations to the cloud: Organizations continue to migrate applications and data from traditional IT environments – typically on-premises – to the cloud. They do so for various reasons, including security, performance, scalability, and accessibility. It’s important to note that we’re still in the early stages of cloud migration – today, only 30% of enterprise workloads have been shifted to the cloud. There are no hard-and-fast rules about which workloads are best suited for the cloud; most cloud migration journeys are unique depending on an organization’s needs. However, we know that almost all organizations evaluate the merits of moving portions of their infrastructure, platforms, and applications to cloud environments.
  3. Increased cost-efficiency: The almighty dollar significantly influences cloud adoption. Cloud services help organizations eliminate capital expenditures on IT systems and hardware refresh cycles; move away from perpetual software license and maintenance agreements, and lower the burden on internal IT resources needed to manage infrastructure and application platforms’ administrative knobs and dials. All these changes mean organizations can allocate their IT budgets more effectively and often do more with less.
For the remainder of this post, we’ll focus on trend #3 – cost efficiency. Regarding cloud adoption, especially infrastructure, cost is among the most critical variables. Cost and Total Cost of Ownership (TCO) are value measurements for cloud infrastructure. Many organizations begin building a business case for cloud adoption and cloud-native development by conducting a thorough cost analysis.

How much data is there? How much is a petabyte?

Before we dive into cost, some context around stored capacity is essential to help contextualize how much data enterprises are gathering. IDC estimates the “Global StorageSphere” – the total installed base of stored capacity – reached 7.9 zettabytes (ZB) in 2021**. This capacity estimate encompasses all organizations/enterprises. Some additional context: as of 2018, the US Library of Congress stored 16 petabytes (PB) of data, or 0.000016ZB (one zettabyte is equivalent to one million petabytes.) It may seem daunting, but based on current capacity and growth rates, organizations will be responsible for storing tens of millions of petabytes of capacity over the next few years.

How much does a petabyte cost?

Now that we’ve established a baseline around capacity, let’s talk about storage costs and how these costs can differ significantly across environments (e.g., cloud vs. on-premises) and providers. For this exercise, we’ll stick with a 1PB stored capacity baseline and make a few assumptions regarding the storage scenario:
  1. Capacity needs to be stored for five years (to match the typical length of a storage system contract)
  2. Data is primarily unstructured and will be placed in object storage
  3. Data is associated with a secondary storage use case (e.g., backup, media/video storage, web content, user-generated content) and does not require frequent access
Estimated Cost to Store 1PB On Premises for 5 Years:
System hardware $500,000
Maintenance $375,000***
Storage Software Included
Facilities (e.g., space, power, cooling) $60,000****
Admin support (FTE cost) $375,000*****
5 Year On-Premises Grand Total $1,310,000

Note: Based on Wasabi estimates of leading providers ***Assume 15% annual system maintenance over five years ****Assume the space needed to store 1PB is between 25%-50% of a standard rack (42U). Power and cooling costs average $1,200 per square foot per year. Assume 10 square feet or roughly $12,000 per year *****Assume personnel costs to manage a 1PB system are 0.5 IT/storage admin FTE at an annual salary of $150,000 Estimated Cost to Store 1PB in Public Cloud per Month:
Wasabi Cloud Provider B
The list price of storage ($/PB month) $6,133 $22,067
Network fees (e.g., transfer, egress) $0 $1,103******
Data access fees (API calls/operations) $0 $6,620********
Monthly Grand Total $6,133 $29,791

Note: Based on Wasabi estimates of leading providers ******Assume networking fees equate to +5% of the base monthly storage rate *******Assume 10% of stored data is accessed/downloaded per month; associated fees equate to +30% of the base monthly storage rate A little more math is needed to convert the monthly $/PB cloud subscription over five years:
Monthly Grand Total $6,133 x 60 months = $29,791 x 60 months =
5 Year Cloud Grand Total $367,980 $1,787,443

Bringing it all together, we can see that there is a wide range of variability when it comes to the cost of storing data on-premises or in the public cloud:
With Wasabi With Cloud Provider B With an On-Premises Storage System
Cost to store 1PB for five years $367,980 $1,787,443 $1,310,000

Like many other IT business decisions, this variability depends on an organization’s particular use case and deployment model, among other factors. For example, an organization storing data on-premises may have facilities fees significantly higher based on regional energy price dynamics. Despite the variability inherent in this exercise, hopefully, this range of estimates provides context and serves as a baseline from which organizations can customize these data points and begin thinking about their pricing and TCO analysis for cloud storage. Concluding Thoughts: Based on our documented assumptions, we can make a conservative guess that organizations should budget more than $1 million to store 1PB of data over five years, regardless of whether that capacity resides on-premises or in the cloud. Naturally, Wasabi allows organizations to come in significantly below this budget expectation. This is a core part of Wasabi’s value proposition – to provide enterprise-grade cloud object storage that is 80% cheaper than leading cloud providers. Based on the above analysis, Wasabi is 80% cheaper than Cloud Provider B and slightly more than 70% cheaper than the on-premises storage system example. *IDC, Worldwide Public Cloud Infrastructure as a Service Forecast, 2022–2026, Doc #US49520222 , August 2022 **IDC, Worldwide Global StorageSphere Forecast, 2022–2026: An Installed Base of 7.9ZB of Storage Capacity in 2021 Came at a Cost of $370 Billion — Is It Enough?, Doc # US49051122 , May 2022

Related article

DATA MANAGEMENTStoring Data On-Demand, Wasabi’s Approach To Simplifying Multi-Tenant Data Complexity

Most Recent

Video Cloud Storage: A Solution for All Your Digital Assets

This article looks at how video cloud storage addresses the challenges and risks inherent in generating video surveillance data.

Enjoy a Seamless File-Server Experience in the Cloud with offers an innovative front-end solution for Wasabi storage users.


Storage Insights from the Storage Experts

Storage insights sent direct to your inbox every other week.