The news this week that Google has lowered the storage prices for Google Drive to unprecedented low levels likely means trouble for Dropbox.

Now that the big boys have entered the cloud storage game, there will be much more competition. Not only that but we might start seeing a rush to the bottom for cloud storage prices.

This means problems for Dropbox because:

• They don’t own their own data centers but rely on Amazon AWS. They can only lower prices as low as they are being charged by Amazon. In other words, they don’t own their own destiny.
• Their business is entirely about cloud storage. Initiatives like Mailbox are limited and hardly likely to become part of their core business.
• The large portion of their user base use the free storage tier. These users don’t generate revenue but cost money to the company as Amazon charges Dropbox fractions of cents for any upload/download.

Cloud storage is becoming ubiquitous and its value can only be augmented by leveraging a healthy ecosystem. Apple, Google, Amazon, Microsoft and increasingly Box have been working on this for years.

Never like today the famous Steve Jobs’ quote that Dropbox is a feature not a product seems so right.

It’s going to be interesting how Dropbox – admittedly the best and more flexible cloud storage solution available to personal users – reacts to this.