I absolutely see the simplicity argument. Personally I'm not sure if 8/month is too high though. I'll have to think about it -- with the (very swift) scaling on the server, I see more what you offer -- not sure if you really fit my use case though. But you're much nicer IMNHO than flickr/picasa.
I recently priced some storage and found that Amazon/Rackspace are at around 10 cents/GB/Month (without transfer...) and a cheap dedicated server would end up around 3 cents/GB/Month (with limited transfer -- free in, 5000GB/Month out) -- but this is for ~2TB of usable storage.
With overhead (all kinds, people, hosting, transfer) -- I suspect it's not very realistic (or rather, attractive) to compete with Amazon on price. I certainly don't need 2TB "in the cloud" right now... and can't quite justify paying for it... yet ;-)
As for formats, I see a use for jpeg2000/webp (yeah, looks like jpeg2000 is pretty much dead for web...) - and for DNG. But DNG would (for now) be for archival storage. Which may or may not be a use case you want to cover.
With dofsome we are trying to separate the photo presentation into a stand-alone service and allow the user to use their social services as distribution channels for their content.
Yeah, no point in competing with S3, better focus on a product built on top of it ;-)
At the moment I am thinking about just doing imports from online backup solutions and really focus on the presentation. For a viable storage MVP you definitely need device specific uploaders..
As camera technology continue to improve and storage continue dropping in price (at least on the camera end, flash cards etc) I suspect more and more low end cameras will support some form of DNG-format.
About 5), (and possibly last paragraph of 2+3)), I would like to see all RAW files supported. You mentionned DNG, I guess you're a Nikon user. I'm not. And I'm right your target user : (I'm Swiss,) not a pro, not looking for an on-line portfolio, but former photographer now doing it as a hobby. When not shooting film I only shoot RAW, and mine are .cr2, not .dng.
Long-term archiving of my digital pictures (be it png, jpg, cr2, png, scanner raw format) has been a concern for quite a long time. I have been a paying flickr user for a few years now but it doesn't fit my needs as I cannot store there my RAW files. I would definately pay 8$/m to have a safe backup somewhere, and your display / scaling / serving service would be a huge +. :)
1) At the moment we only support jpg and png. So a copy of your 1000s of avg 10MB (max worst case global image size average, probably lower). Which is fine.
2+3) Our motivation with single tier was simplicity. Simplicity of the homepage, simplicity of thinking while you read something before you hit that 'Try' button..
I am not sure if a general user thinks about our margins and I can be wrong, but I think we should try to match the value he gets + position ourselves regarding to competition. If somebody cares about margins the S3 prices are a pretty good general storage reference point ;-)
To be completely transparent, we currently think that with an unlimited account we shouldn't get much more than ~40GB of jpegs from a user over his lifetime ON AVERAGE. Once this is amortized across big enough number of users I doubt it will get much more than that. zenfolio.com has been around for many many years and they have an unlimited account for $50/year and cater to professionals with huge files (think a wedding photographer who uploads couple GBs each other weekend).
Our average target user is not a pro (we are not aspiring to be a portfolio website at the moment) but has photography as a hobby and wants a clean no-bulshit way to upload and share his photos across online and offline personas.
4) All server side, with aggressive caching and on-the-fly scaling. No scaling on the client.
5) Just a jpeg and png to simplify the pipeline in MVP, if we see an interest in other formats we will investigate. Would you like to see a support for jpeg2000? For upload or also for serving? At the moment, the browser support seems still weak.