How many features does it take to be considered a product? That’s a question Wall Street is probably asking regarding Dropbox and Box and their quests to enter the public-market promised land. As these companies continue to burn through cash while Amazon, Google and Microsoft roll out competing services, investors have to be questioning just how feasible their business plans really are.
In the past several weeks, the storage wars between the big cloud providers has created a sort of ancillary battle involving the features thrown on top of the storage services these companies want to sell. Remember that in 2009 Steve Jobs once described Dropbox as being “a feature, not a product,” per a recollection Dropbox CEO Drew Houston once had with the Apple legend.
Amazon’s (S AMZN) Zocalo work-collaboration tool obviously stung Box and Dropbox, but it was also aimed at Microsoft (S MSFT) and Google (S GOOG), two cloud-storage giants who have also been rolling out enterprise features on a pretty consistent basis.
With the cloud giants duking it out with each other and stepping up in the work-collaboration space, Box and Dropbox have been on a feature-release offensive. Box rolled out unlimited storage for certain customers and a special Microsoft Office tailored with Box and Dropbox unleashed several new updates to its enterprise lineup, including security and control measures for document sharing and editing and a new search interface slated to be released in a few months.
Ever since Steve Jobs’s shared with Houston his feelings on the company (and seemed peeved off when Houston rejected Apple’s acquisition proposition), Dropbox has been on a quest to distinguish itself as something more than a storage company. Considering how similar the circumstances facing Box and Dropbox are, it’s safe to say that Box has had to deal with its own identity issue.
While the Dropbox naysayers may have doubted the company when it first struck a chord in the tech scene, it should count for something that the company has managed to sustain itself with hundreds of millions of dollars in investment and now claims 80,000 business customers (although the company doesn’t break down any details about that number). The same could be said of Box, which claims 39,000 business customers and just scored $150 million in early July as it holds off on going public. Both companies have cash on hand to survive longer than expected and they are constantly researching new tools to their repertoires.
The problem facing Dropbox and Box, however, is the fact that no matter how many features the two companies can possibly roll out, the three cloud giants remain looming in the background and working on their own tools and services designed to capture the enterprise market. At every point that Dropbox or Box comes up with a new feature that they can add to their products and say, “Hey, look — we are more than just a storage service,” one of the three cloud storage titans can introduce their own similar feature, and poor Dropbox and Box have to figure out another way to let the world know they are more than what they are perceived to be.
So when it all comes down to it, it’s less a question of semantics that Dropbox or Box are features or products then it is a question of whether or not the two have the resources and scope needed to survive the war involving Amazon, Microsoft and Google. Dropbox and Box may have the cash reserves to stay afloat and roll out new services in the time being, but until they start turning substantial profits, it’s hard to say what makes them more special to investors than the other cloud providers in regards to storage.
Wall Street already has plenty of companies burning through cash that it’s not too happy with (Amazon, anyone?), and time will tell whether or not the finance world wants to deal with more companies shelling out cash in an effort to find a monetizable business.