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Google announced Terrabyte storage for 256 dollars per year for Picasa web photo storage. I still think Google has a long way to go. $256 per TB per year is 8x more than the current price of buing a TB hard drive on the open market and using it for 2 years. 16x more expensive if you consider that a hard drive should work fine for 4 years at least.

Google needs to implement fully cold cloud storage. If I want to upload a TB of my personal stuff to Google cloud storage, and that I very rarely need to access that data, Google should store 2 copies at 2 separate locations (if one hard disk fails), but then Google should also be able to turn off the power to the hard drives to 0 power consumption, and the only charge for power usage to resume turning on the hard drives on demand and charge for that power consumption as part of the bandwidth costs, cheaper than $0.01 per GB transfered from and to the cloud storage.

Then for the hosting of popular files, Google would automatically host those on more expensive always on hard drive storage, though the extra bandwidth usage should pay for most of that.

For (mostly pirated) popular video and audio files, Google should do like Streamload once did, only host one copy for all the users who “beamed” it instantly to their accounts. Thus if you want cloud storage for movie and music files that in average more than 1000 other Google cloud storage users are using, th cost for that TB of cloud storage should be less than 1/1000th the TB storage cost per year, thus $0.25 per TB per year, thus free unlimited cloud storage for popular files, financed by advertising. But Google probably needs to figure out some copyright issues before this happens.

For example, if I want 1TB on Google cloud storage today, Google should let me buy about 2x 1TB drives on the open market, at about $80 per hard drive at current hard drive pricing, and have them instantly connected to the Google cloud storage. Thus the pricing should be $80 per TB per hosted unique files per year. And $0.01 or less per GB transfered which includes power consumption costs (could depend also on the bitrate and the sustained transfer rates, bandwith to transfer many small files slowly would cost more than transfering the files quickly).