We may compete with S3 for low-latency service later on (latency can be made arbitrarily low by spending enough money on caching.) Initial calculations suggest we could be almost as low-latency as S3 and still under price by a good margin.
How are you calculating your latency? Also, what distribution do you assume your file accesses will come from?
This is cheap and at qty 1.
A backblaze type box is ca 12K for 135TB of storage.
Assume an interest rate of 5% and 36 months worth of repayments and the server itself is worth $725/month
It's uses roughly 1kw of power and 4u of rack space, so say you have 6/rack with a 30A rack. You can get the rack for say 5k, giving us a total rack cost/server of $833/month
Total cost/server month is $1558/month.
Total cost/gb month is $0.011/gb month.
Add in parity replication (1 in 4, 25%), $0.014/gb month.
This doesn't include compression or dedup, both of which drops cost price dramatically.
Compare that to say S3's $0.14/gb and you can see why I'd say the margins are stupid, especially at the scale they're running at.
Note that the BackBlaze machines are optimized for very cold data since they only need to support backup and restore. We also do custom hardware at SpiderOak, but we support web/mobile access, real time sync, etc. That makes our hardware slightly more expensive because of the generally warmer data. So you're off by a few pennies, but certainly in the right zone.
For Amazon, I suspect their internal S3 cost is actually quite a bit higher than either BackBlaze or SpiderOak since their data is warmer.
Long term archival data is different than everyday data. It's created in bulk, generally ignored for weeks or months with only small additions and accesses, and restored in bulk (and then often in a hurried panic!)
This access pattern means that a storage system for backup data ought to be designed differently than a storage system for general data. Designed for this purpose, reliable long term archival storage can be delivered at dramatically lower prices.