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The battle for cloud storage customers — well, make that paying cloud storage customers — is fully on. By all accounts millions of people store at least some of their data in the cloud. How many of them are paying for the privilege is what’s under dispute.
Box and Egnyte — along with Accellion, GroupLogic, SurDoc, Intralinks, YouSendIt (see disclosure below) and other companies are trying to win over businesses to their respective cloud storage and file synchronization services. Dropbox is the leader in consumer-oriented cloud storage, claiming 50 million users, and Box is trying hard to become the Dropbox of the enterprise, claiming 10 million business customers. But again, the issue is how many of them are paying and Box (nor Dropbox for that matter) isn’t saying.
Most of these cloud storage services rely on a “freemium model” — they offer free storage up to a certain limit, and then try to convert those users to paid subscriptions. Egnyte claims more than 600,000 customers. Till now, it has offered a 30-day trial then the customer either comes aboard or is out. This offer, in effect, extends that free trial to eight months.
Most cloud storage providers will tell you that converting free to paid accounts is difficult. Most put the conversion rate in the 2 percent to 3 percent range. (YouSendIt, which claims 550,000 paid customers, says it converts 7.5 percent of its freemium users.)
Clearly there is a demand among businesses of all sizes for secure, reliable cloud-based storage. What’s not clear is which company will become the Dropbox equivalent in this hotly contested market. That’s why it won’t be surprising to see more offers of this type cropping up in the next few months.
Disclosure: YouSendIt is backed by Alloy Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media.