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Feature or product, Dropbox just needs to survive Amazon, Google and Microsoft

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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.


11 Responses to “Feature or product, Dropbox just needs to survive Amazon, Google and Microsoft”

  1. Richard

    Microsoft’s OneDrive now offers 1TB storage for all users of Office 365 (and a free 15GB base for everyone).

    Given the integration into Office and Windows it’s a great solution for Consumers. OneDrive Pro is the business solution and is more closely aligned with SharePoint.

  2. Sun W Kim

    Microsoft should consider offering 100GB of free storage with their OneDrive product. DropBox is the best desktop client out there. In second, I think, is OneDrive (aka FolderShare back in 2005). I think Microsoft can compete well if they leverage their Office application users on the desktop and tablets.

  3. Dropbox + box will merge at/around bubble2.0 burst(competing each other + against big 4 in a commodity market is not easy for any one). Then this combined company will be picked up Cisco(WebEx) or Citrix(GoToMeeting) to provide add-on service.

  4. paul sagawa

    Wall street may not be happy with amazon for its unwillingness to deliver profits, but it is NOT burning through cash. In fact, it is generating considerable positive free cash flow.

    • Michael Ryan

      @Lusine, it looks interesting, although our WebDrive solution has been providing that same functionality since 1998.

      Unique to WebDrive is it’s ability to mount those storage services as a network drive letter; allowing the end user to migrate data simply by drag-dropping files in Windows Explorer or Finder. Since it runs down in the kernel as a service, it can also be leveraged by any one of the RoboCopy type of migration utilities currently on the market. It has been field tested on millions of computers world-wide and is the trusted standard for Enterprises who need to securely leverage remote online storage services and/or corporate data repositories.

      What we are seeing in the market, based on direct feedback from our WebDrive customers who are using our technology to leverage the consumer/smb grade services, is that business is slow to turn all their data over to a SaaS based solution. Non mission critical data that can be shared with the public is pushed out to these storage services, while critical data remains under lock and key on the internal data servers where access control, policy, and compliance can be enforced. I believe this trend will continue, and eventually give way to a hybrid/private cloud model where Enterprises still control the security of their data, but it will be in their own cloud, not in the DropBox/Zocalo/OnDrive Cloud.

      Fortunately, WebDrive provides unified access to all locations making it an idea solution no matter where the data lies.

  5. Michael Ryan

    The days of “free online storage” are numbered, there’s no money it and the reality is that there are employees, servers, data centers, electric bills, all of which all cost money on an ongoing basis to provide consumers with a free petabyte of online storage; not to mention the hard costs of developing, supporting and extending the client technology for accessing that storage.

    So, to survive, all dedicated consumer grade services, such as DropBox will need to turn to the business user to generate revenue to offset the hard costs of a ‘hard-drive-in-the-sky’. The Amazons, Googles and Microsofts are a bit better off because this is just a small business unit and they have other revenue streams to offset huge $ losses from free online storage.

    This is what’s now happening in the space; DropBox, Amazon, MS and Google are now seeing the value in Box’s ‘business user first’ model and are all racing to grab the early business adopters of cloud storage.

    But how many businesses are ready to turn over their precious LAN based data stores to the likes of a DropBox, or Amazon, where one major data outage could leave their business dead in the water for hours, days, or longer? Not to mention HIPAA, PCI, and other regulations which prohibit the exposure of sensitive information to the public.

    I’m not sure Enterprises are ready to trust their corporate data to DropBox For Business. There is still too much as stake just to save a few $ on the bottom line.

    It will be quite some time before we see someone from Microsoft open a command prompt and enter

    move c:\*.* \\OneDrive\*.* /s

    • thomas-murphy-1069020


      I think you should look at my company, nCrypted Cloud. If Enterprises want to securely share data OUTSIDE the firewall, there is NO better solution than nCrypted Cloud plus Dropbox or Box or OneDrive or GoogleDrive or Egnyte.

      We support all five (and we are adding more). With nCrypted Cloud and any of the storage providers mentioned above, the Enterprise can share data outside the firewall and still be in control of the data. The owner can revoke the recipients access to the data at any time.

      The user (and the Enterprise) can also revoke access to data on lost or stolen device. The enterprise can also do a single click revocation to any and all corporate data on ALL devices including employee owned devices.

      Add in the Enterprise control panel that allows the Enterprise to see (via a DLP level Audit function) who is accessing their data at all times and controls that allow the Enterprise to tightly (or Loosely) control what devices and other controls that allow them to completely control their data outside the firewall.

      Both Dropbox and Box say that they are present in 95+% of Enterprises. According to Gartner, Forrester and others, this is SHADOW IT.

      Enterprise should be doing everything they can to protect their data both inside and outside the firewall.

      • Michael Ryan

        Yes, solutions which overlay traditional file management features with online storage services are resonating in the Enterprise. Our Cornerstone MFT solution has been around for nearly 10 years and provides similar functionality as nCrypted albeit offered as an on-premise, hybrid, or private cloud based solution. It integrates directly into the corporate Active Directory and NTFS repository to preserve domain level authentication and access policies for internal data while allowing access to the less secure DropBox silos of information.

        You are correct that Enterprises need to secure private data while allowing access from outside the firewall, so we’ve added a reverse proxy server, DMZedge Server, which allows the Enterprise to keep ALL inbound ports closed on their corporate firewall while still allowing authorized access to internal data stores. Since it’s completely cluster aware, scalable, and has built-in failover, we are finding that Cornerstone MFT is a key component for mission critical workflow and data sharing for the Enterprise.

  6. Anecdotally speaking, Dropbox is the king of storage for the consumer base. When you’re ready for major league business storage, one then thinks of the Boxes and Googles of the world.

    This battle will rage on for some time, Microsoft will purchase Box and Google will gobble up Dropbox and those 2 behemoths will pound on each other for several more years.

    In 3 to 5 years the free storage ride will be over.