Google Drops Storage Prices for Gmail, Picasa

Google announced it has “dramatically” lowered the price it charges for online or cloud storage. Instead of the old $20 per year price tag, Google is now charging $5 per year for 20 GB.

The search colossus also said it now offers storage of up to 16TB.

But the 20GB will be plenty for most consumers. For example, Google (NASDAQ: GOOG) said that amount is enough to store more than 10,000 high-resolution images taken with a five megapixel camera. Sixteen terabytes can hold 8 million full resolution photos.

Google said falling storage prices allowed it to reduce what it charges. Also, it wants to meet a growing trend of users looking to move their data off the desktop to cloud services they can access from PCs, notebooks and other mobile devices.

“And Google paid storage offers an extra level of security, protection and accessibility that you can’t get with an external drive — at a similar cost per gigabyte,” said Elvin Lee, a software engineer at Google in a blog post.

Google offers several gigabytes of free storage for services like its Gmail e-mail and Picasa Web photo-sharing service. For example, Gmail includes over 7GB of free storage. Additional storage options beyond 20GB include: 80GB for $20/year, 200 GB for $50/year, 400 GB for $100/year and 1 TB for $256/year.

“As always, extra storage acts as an overflow that you only start using when you reach the limit of your free storage, and people who have extra storage will be automatically upgraded,” Lee said.

The news comes at a time when Google faces increased competition in the cloud applications space. Cisco this week announced it plans to offer a hosted e-mail service, WebEx Mail, that will compete with Google’s enterprise-oriented Google Docs.

Cisco’s Webmail client, which includes Ironport Security and high availability, will be available next year with 5GB storage at $3.50 per user per month. A “Standard Client package” includes Webmail client, Ironport, high availability, 5GB storage and support for Microsoft Outlook Client and ActiveSync for $5 per user each month.

Cisco said it will also offer BlackBerry support to the Standard package for $1 monthly per user. Blackberry support can be added to the Standard client package for an additional $1 per month per user.

The networking giant has also said it plans to make additional storage options available in the future.