What Is Cloud Storage?

Published: 16 October 2024
Contributors: Stephanie Susnjara, Ian Smalley

What is cloud storage?

Cloud storage is a cloud computing service in which data and files are stored offsite by a third-party provider and can be accessed through a public internet or dedicated private network connection.

The cloud service provider (CSP) hosts, secures, manages and maintains the servers associated with cloud infrastructure and helps ensure that users can access the data whenever needed. The customer is responsible for securing data, applications and workloads deployed within the cloud.

Cloud storage delivers a cost-effective, scalable alternative to storing files on premises (or offline) on hard disk drives or storage networks. Computer hard disk drives can only store a finite amount of data. When users run out of storage, they need to transfer files to an external storage device.

Traditionally, organizations built and maintained storage area networks (SANs) to archive data and files. However, SANs are expensive to maintain because as stored data grows, companies must invest in adding physical servers and other IT infrastructure to accommodate increased demand.

Cloud storage services provide elasticity, which allows users to scale capacity as data volumes increase or dial down capacity, if necessary. By storing data in the cloud, organizations can save by paying for storage technology and capacity as a service rather than investing in the capital costs of building and maintaining in-house storage networks.

With cloud storage, you only pay for exactly the capacity you use. While your costs might increase over time to account for higher data volumes, you don't have to overprovision storage networks in anticipation of increased data volume.

The COVID-19 pandemic led to a massive increase in cloud storage as businesses sought ways to support the remote workforce. A 2023 report from Fortune Market Insights details the global cloud storage market value at USD 108.69 billion.¹ The study projects this market to grow from USD 132.03 billion in 2024 to USD 665 billion by 2032, with a CAGR of 22.4% during the forecast period.

An increased demand for advanced technologies like artificial intelligence (AI) and big data analytics, coupled with the need to support huge volumes of unstructured data, are driving this growth.

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How does cloud storage work?

Like on-premises storage networks, cloud storage uses servers to save data; however, the data is sent to servers offsite. Most of these servers are virtual machines (VMs) hosted on a physical server. As storage needs increase, the provider creates new virtual servers to meet demand.

Users connect to a storage cloud either through the internet or a dedicated private connection by using a web portal, website or mobile app that communicates through an application programming interface (API). The connecting server forwards data to a pool of servers located in one or more data centers, depending on the size of the cloud provider's operation.

As part of the service, providers store the same data on multiple machines for redundancy. This way, users can still access data if a server is taken down for maintenance or suffers an outage.

Cloud storage is available in the following environments:

Private cloud

Public cloud

Hybrid cloud

Multicloud

Public cloud storage

A public cloud model allows you to connect over the internet to storage space maintained by a cloud provider and used by other companies. Providers make these services accessible from any device (for example, smartphones, desktops) and let you scale up and down as needed.

Private cloud storage

Private cloud storage setups replicate the cloud model, but they reside within your network, using a physical server to create instances of virtual servers to increase capacity.

You can choose to take full control of an on-premises private cloud or engage a cloud storage provider to build a dedicated private cloud that can be accessed with a private connection. Organizations like finance and healthcare often opt for private cloud data storage to exercise greater control over confidential client information.

Hybrid cloud storage

A hybrid cloud model combines elements of private and public clouds, giving organizations a choice of which data to store in which cloud.

For instance, highly regulated data subject to strict archiving and replication requirements is more suited to a private cloud environment. In contrast, less sensitive data (such as email that doesn't contain sensitive business information) can be stored in the public cloud. Some organizations use hybrid cloud to supplement their internal storage networks with public cloud storage.

Multicloud storage

Multicloud is the use of cloud services from more than one cloud vendor, providing organizations with the flexibility to optimize performance, control cost and avoid vendor lock-in. Multicloud storage unifies storage services from multiple cloud vendors into an environment that users can access through a single interface.

Benefits of cloud storage

Cloud storage offers many benefits, including the following:

Offsite management

Fast implementation

Cost-effectiveness

Scalability

Business continuity

Offsite management

A cloud provider assumes responsibility for maintaining and protecting the infrastructure associated with storing the data. This frees staff from tasks associated with storage—such as procurement, installation, administration and maintenance—so they can focus on higher-level priorities.

Fast implementation

Cloud service accelerates setting up and adding to storage capabilities. With cloud storage, you can provision and deploy services within minutes, depending on the capacity involved.

Cost-effectiveness

As mentioned, you pay for the storage capacity you use. This feature allows organizations to treat cloud storage costs as an ongoing operating expense instead of a capital expense with the associated upfront investments and tax implications.

Scalability

Growth constraints are one of the most severe limitations of on-premises storage. With cloud storage, you can scale up as much as you need. Capacity is virtually unlimited.

Business continuity

Storing data offsite supports business continuity when a disruption (for example, a natural disaster or cybersecurity attack) cuts access to your business premises.

Types of cloud storage

There are three main cloud storage types, each offering its own advantages.

File storage

Block storage

Object storage

File storage

File storage saves data in a hierarchical file and folder structure. The data retains its format, whether residing in the cloud storage system or at the client where it originates, and the hierarchy makes it easier and more intuitive to find and retrieve files when needed.

File storage in the cloud is commonly used as a service and provides access for multiple users to a common set of files stored in the cloud.

Block storage

Traditionally employed in SANs, block storage is also common in cloud storage environments. This storage model organizes data into large volumes called "blocks.” Each block represents a separate hard disk drive. Cloud storage providers use blocks to split large amounts of data among multiple storage nodes.

Block storage resources provide better performance over a network, thanks to low IO latency (the time it takes to complete a connection between the system and the client). These resources are especially suited to large databases and applications. For instance, virtual private clouds (VPCs)—public cloud offerings that let an enterprise establish its own private cloud-like computing environment on shared public cloud infrastructure—use block storage for high-performance data storage.

In the cloud, block storage scales easily to support the growth of an organization's databases and applications. For example, block storage helps consumer-driven websites capture large amounts of visitor data that can be stored and analyzed to improve customer experiences.

Object storage

Object storage manages data as individual “objects.” Each object includes the data in a file, its associated metadata and an identifier. Objects store data in the format that it arrives in and make it possible to customize metadata to make the data easier to access and analyze.

Instead of being organized in files or folder hierarchies, objects are kept in repositories that deliver unlimited scalability. Since there is no filing hierarchy and the metadata is customizable, object storage allows you to optimize storage resources in a cost-effective way.

Cloud-based object storage is ideal for long-term data retention. Businesses use object storage to replace traditional archives, such as network attached storage (NAS).

Object storage has become critical for dealing with unstructured data (for example, video and audio files, web pages, sensor data) in an efficient and cost-effective way. In 2022, 90% of data generated from organizations was unstructured.²

Cloud storage for business

Today, cloud storage is ubiquitous across the business landscape—from sole proprietorships to large enterprises.

If you run a small business, cloud storage helps offload tasks by storing and accessing data remotely. This capability is beneficial if you don't have the in-house resources or skills to manage storage. Cloud storage can also help with budget planning by making storage costs predictable, allowing you to scale as the business grows.

If you work at a larger enterprise (for example, a manufacturing company or retail chain with dozens of locations), you need to transfer hundreds of gigabytes of data for storage regularly. In these cases, a major cloud storage provider, such as Amazon Web Services (AWS), IBM Cloud®, Microsoft Azure or Google Cloud, can handle your volumes.

Security and compliance

Storage security is a serious concern, especially for organizations that handle sensitive data (for example, credit card information, medical records). All businesses seek data protection with the most up-to-date methods available.

As previously mentioned, cloud security is considered a shared responsibility model between a CSP and the client organization. The provider is responsible for underlying infrastructure security and the customer is responsible for securing their data and applications within that infrastructure. Companies can minimize risks by encrypting data in motion and by using dedicated private connections—for example, a virtual private network (VPN)—to connect with the cloud storage provider.

Today's cloud storage companies offer robust offsite security with layered security solutions that include endpoint protection, content and email filtering, threat analysis and best practices that comprise regular updates and patches. They also offer cloud security permissions like access control, user authentication and AI-powered data encryption. Helping ensure these measures are in place is especially important when data involves confidential business files, personnel records and intellectual property.

Certain industries like finance, energy and government services must comply with strict data privacy and archival regulations for specific files. Today, all major cloud storage providers offer compliance tools and add-ons to help organizations align their cloud storage with regulations impacting their business.

Cloud-based data backup

Data backup is as important as security. Businesses need to back up their data so they can access copies of files and applications—and prevent interruptions to business—if data is lost due to cyberattack, natural disaster or human error.

Cloud-based data backup and disaster recovery services have been popular since the early days of cloud-based solutions. Like cloud storage, you can access the service through the public internet or a private connection. Cloud backup and recovery services free organizations from the tasks involved in regularly replicating critical business data to make it readily available should you ever need it in the wake of data loss.

Cloud backup offers the same advantages to businesses as storage—cost-effectiveness, scalability and easy access. One of the most attractive features of cloud backup is automation. Asking users to continually back up their own data produces mixed results because some users always put it off or forget to do it. This creates a situation where data loss is inevitable. With automated backups, you can decide how often to back up your data, be it daily, hourly or whenever new data is introduced to your network.

Backing up data off premises in a cloud offers an added advantage: distance. A building struck by a terror attack or some other calamity might lose its on-premises backup systems, making it impossible to recover lost data. Off-premises backup provides insurance against such an event.

Cloud storage servers

Cloud storage servers are virtual servers—software-defined servers that emulate physical servers. A physical server can host multiple virtual servers, making it easier to provide cloud-based storage solutions to multiple customers. Virtual servers boost efficiency because physical servers typically operate below capacity, which means some of their processing power is wasted.

This approach enables providers to offer pay-as-you-go cloud storage and to charge only for the storage capacity you consume. When your cloud storage servers are about to reach capacity, the cloud storage provider spins up another server to add capacity—or makes it possible for you to spin up an additional virtual machine on your own.

Open-source cloud storage

Open-source cloud storage provides a viable option for businesses and individuals with expertise to build their own virtual cloud servers. Open source means the software used in the service is available to users' expertise and developers to study, inspect, change and distribute.

Open-source cloud storage is typically associated with Linux® and other open-source platforms. Advantages of this approach include control over administrative tasks and security.

Some of the functions available from open-source cloud storage services include:

Syncing files between devices in multiple locations

Two-factor authentication

Data transfer encryption

Password-protected sharing

Many organizations use a mix of open-source and paid cloud storage solutions. This hybrid approach provides the flexibility and cost-effectiveness of open source with the high performance and virtually unlimited capacity of paid cloud storage services.

Cloud storage pricing

Cloud storage price generally depends on the region, resources consumed (compute, storage, data transfer, databases) and the chosen pricing model (on-demand, reserved, spot instances).

Cloud storage costs vary. Some cloud storage providers charge monthly by the cost per gigabyte, while others charge fees based on stored capacity.

Fees vary widely and you might pay USD 1.99 or USD 10 for 100 GB of storage monthly, based on the provider you choose. Additional fees for transferring data from your network to the fees based on cloud storage are usually included in the overall service price.

Providers might charge extra fees on top of the basic storage and data transfer costs. For instance, you might incur an additional fee every time you access data in the cloud to make changes or deletions or if you move data from one place to another. The more of these actions you perform on a monthly basis, the higher your costs will be. Even if the provider includes some base level of activity in the overall price, you incur extra charges if you exceed the allowable limit.

CSPs might also factor the number of users accessing the data, how often users access data and how far the data must travel into their charges. They might charge differently based on the types of data stored and whether the data requires added levels of security for privacy purposes and regulatory compliance.

Cloud cost optimization is a framework that combines strategies, techniques, best practices and tools to help reduce overall cloud costs (like cloud storage) and find the most cost-effective way to run your applications in the cloud environment and maximize business value.

FinOps, a portmanteau of finance and DevOps, is a cloud financial management practice that helps organizations maximize business value in their hybrid and multicloud environments.

Cloud storage use cases

Cloud storage services are available from dozens of providers to suit all needs, from individual users to multinational organizations with thousands of locations.

Popular storage applications for everyday users include Google Drive (for Windows, macOS and Android operating systems), iCloud (for Mac users) and Microsoft OneDrive. These and other cloud storage services span many use cases:

Team collaboration: Teams can store and share files like spreadsheets or Word docs in the cloud for real-time collaboration. This capability makes it easier for users to work together on a project, which is why file transfer and file sharing are among the most common uses of cloud storage services. Common cloud-based collaboration tools include Box, Google Workspace and Dropbox.

Data archiving: Cloud storage services can handle large volumes of database records that would otherwise take up too much room inside your network. You can consolidate archived data in a centralized repository with lifecycle controls and immutable retention policies.

File management and syncing: Cloud storage services provide file syncing to help ensure versions of the same files in multiple locations are updated whenever someone changes them. File management capabilities allow you to organize documents, spreadsheets and other files as you see fit and make them accessible to other users.

Testing and development: Cloud storage significantly aids testing and development by providing a readily accessible, scalable and flexible environment to store large amounts of test data. This allows developers to spin up testing environments on demand quickly, run various test scenarios and easily access data for different development stages without needing to manage physical hardware.

Content delivery: Cloud storage services can also handle media files on content delivery network (CDN) servers (also called "edge servers") spread across the globe. This allows streaming companies like Netflix and Hulu to deliver content quickly, improving the user experience.

AI and data analytics: Today's organizations are modernizing their data storage infrastructure to harness business opportunities presented by AI, machine learning (ML) and advanced analytics. Modern cloud object storage allows organizations to store the massive volumes of data required to train AI models and accelerate ML and deep learning workflows.