Google have slashed the price of online storage space to just $5 per year for 20 gig of space and you can have 1TB for just $256/year… quite staggering prices we feel.

The announcement was made via the Google Photo blog yesterday evening and claims double the storage for a quarter of the price. Google cited Moore’s Law for the drop in storage costs and said that this along with improvements made by them allowed them to lower the cost to us, the end customers.

The online storage is currently only available to use with Picasa and Google Mail but could this be just the start? Our feelings are that this is the start of moves to allow more and more customer data in the cloud and should allow the cost of hardware running the Google Chrome OS to be cheaper due to the reduced local storage (though with Moore’s law perhaps the price reduction won’t have such a large impact).