Several months ago, Dropbox dropped their price[1] to $10/month for 1 TB, matching Google Drive[2].

But cloud storage providers charge a multiplier more than this:

* S3[3] is $0.0220 per GB at scale for reduced redundancy, or $22.53/month * Google Cloud Storage[4] is $0.02/GB for reduced redundancy, or $20.48/month. * Microsoft Azure[5] is $0.0224 per GB at scale, or $22.94/month.

The only cloud provider that comes close is Amazon Glacier[3] at $0.0100 per GB, or $10.24/month, but you have to wait 4 hours for your data.

These prices are just for storage - not including any transfer to/from the user.

What am I missing? How in the world can Dropbox and Google charge less than half of what just the raw storage would cost?

Is Dropbox taking advantage of most users not actually using their full 1 TB? Are they losing money when someone actually stores that much stuff? Is this some kind of de-duplication magic? Do they have access to a cheaper method of storage than the rest of us?

1. https://blog.dropbox.com/2014/08/introducing-more-powerful-dropbox-pro/ 2. https://support.google.com/drive/answer/2375123?hl=en 3. http://aws.amazon.com/s3/pricing/ 4. https://cloud.google.com/storage/pricing 5. http://azure.microsoft.com/en-us/pricing/details/storage/