I remember because we were using assembla for some stuff and then moved away when they started charging. I guess that move didn't work too well for them.
To summarize: they didn't have a sustainable business plan and when the costs got too bit they canceled free service. They say now that they're better prepared.
This is why on Indefero I offer only a limited space free account (still with your own domain). The percentage of people using for free such large offers is too high. This is because you are dealing with people who know how to integrate with different services (googlegroups, wikispace, sourceforge, etc.) and can get a really nice setup for free.
From a business point of view, I definitely prefer to have less visibility but a higher percentage of paid customers. This allows me to create a product which is of high quality on the long term because I have money to do so. And in fact, discussing with my customers, they prefer it that way.
Note that the free offer of Assembla is not free, you get direct advertising when accessing your space.
But if we do small maths and we consider that Assembla has the incredible 5% conversion rate from free to paid. This means that on average they will have for 100 users:
95 x 1GB of "free data"
5 x $49 x 2.5GB of paid data
I take the 50% usage as on the long run it what my personal stats gives me.
So about 100GB of data for $245 per month. As you need a triple backup to be robust. It means 300GB of data to maintain for $245 per month.
It is possible, but the margin will be razor thin if you want to provide quality. It is a bold move, I am eager to see how it develops.
Thanks for the nice comment! You are right, but this is not because of marketing grounds, this is because I would personally never use a software as as a service for my code/projects where I cannot move out of it without losing my data and workflow.
This is another subject, but for a critical part of my business, I want to always have full control over my data and workflow. By allowing people even with the free account to have their own domain and a full backup compatible with the open source (GPL) version, my customers can migrate out without even having their users noticing the change. This is my idea of freedom for SaaS.
According to Andy Singleton, CEO of Assembla.com, he said:
We did offer free private workspaces in 2006-2008. We didn't have a clear business model at the time. We started out with a goal to get to know programmers who worked on distributed teams. We supported this for three years, working nights and weekends. However, it turned out that the demand increased exponentially, and our costing and admin costs were out of control. So, we had to cancel some of the free services and ask our private users to pay a small subscription fee.
This time, we have been much more careful with the business model. Some of the things that are different are:
* The package is different. In this free repo package, you do not get all tools. We have many opportunities to sell our premium tools to serious projects. And, we have more and better tools to sell.
* We are using affiliate sponsors - essentially advertising. We are offering cloud hosting services to our users, and we make affiliate fees when we sell them. In the future, we will offer other cloud services that you can add to your "code in the cloud."
* We have a profitable subscription business that pays for our admin and support team. We only have to make sure that we have a high quality service that attracts a few more of the customers that appreciate the complete service and pay for it.