Can Dropbox & Box Survive Commoditized Storage? - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Cloud // Cloud Storage
Commentary
11/7/2014
11:26 AM
Connect Directly
LinkedIn
Twitter
RSS
50%
50%

Can Dropbox & Box Survive Commoditized Storage?

Microsoft and Google have turned up the heat on the cloud storage vendors. Time for them to respond.

In announcing unlimited storage for Office 365 last week, Microsoft is following Google's lead: One way to win over enterprises is to treat the storage part as a loss leader while offering competitive pricing for basic productivity apps. So why aren't cloud competitors Dropbox and Box following suit?

Don't get me wrong. I'm a fan of both. Dropbox was the first to make the fiendishly complex problem of file sync look easy to the customer, and the company makes it easy and attractive for developers to integrate support into any app. Box has done a great job serving business customers with its enterprise-grade security and management, and its new "platform" strategy is interesting.

[Make cloud storage work for you. See Our Cloud Disaster Recovery Story.]

But Dropbox and Box aren't courting enterprises in the right ways. Cloud storage is now a commodity, and because enterprise security and management must be a given, new sales must come from one or two places:

  1. From customers who use existing budget line-items to replace existing software with something better and/or less expensive.
  2. From customers who can make the case that there's compelling enough innovation in Dropbox's or Box's products to justify a new budget line-item for their products.

Both vendors are doing well with No. 2 but not so much with No. 1, which is the more important factor for enterprise adoption. Dropbox and Box need to be able to answer this question: Why would CIOs need to buy your products, with no bundled Office work-alike, given all of the following Office 365 and Google Apps benefits?

• Regular updates. Everybody is running the same version of Office or Google Apps without IT having to push complicated updates every few years.

• Better collaboration. Multi-author simultaneous editing, pioneered by Google but copied by Microsoft in its cloud suite, has changed how the people in my organization collaborate. We no longer have the dreaded "file conflict" problems, when two or more people using conventional editing tools try to save files at the same time.

• Free storage. With Office 365 or Google Apps, companies get secure and manageable cloud storage included with their software at no extra charge.

• Mobile support. It used to be that only Dropbox integrated well with mobile applications -- it led the way in courting third-party developers. Box has caught up. But so did Google with its Drive product, available on many third-party apps, and Microsoft with OneDrive, available on fewer but still enough. (Of course, Google and Microsoft offer their own apps as well.)

• API Support. Dropbox and Box make it easy to write apps to interact with cloud documents, but so do Google and Microsoft. Google goes a step beyond by letting developers write code that digs into the contents of the Office files, so if someone is using a spreadsheet as a database, for instance, developers can access it through Google's Fusion Tables.

(Source: Geralt)
(Source: Geralt)

Dropbox and Box offer similar capabilities, but if an organization buys one of their products, it still must buy Office licenses. Dropbox's and Box's strategy of integrating with Office 365 (Dropbox announced its integration Nov. 4) is a case of the lamb lying down with the lion. It makes for a great photo op, but how does that help the two vendors compete for scarce IT dollars?

Folks who disagree with me point to the "post-PC era," one in which smartphones, tablets, and other mobile devices take precedence over PCs and notebooks when it comes to personal productivity and number crunching. But before you drink too much of that Kool-Aid, you need to spend some time actually managing IT at a typical organization. We're not going to mobile devices overnight for a host of reasons. Most enterprise applications require Windows components. Finance folks can't load their Excel spreadsheets with complicated functions on most mobile devices. Call centers with expensive peripherals (card readers, phone interfaces) require a serial port or other PC-centric interface. And so on.

For now, if Dropbox and Box want my money, and my colleagues' money, they'd better start appealing to the cash-flow/replacement-value proposition. That means they'll need to bundle an Office replacement with their cloud software. Whether they build such an application suite, buy another vendor, or partner with one is up to them.

If you just look at vendor financials, the enterprise storage business seems stuck in neutral. However, flat revenue numbers mask a scorching pace of technical innovation, ongoing double-digit capacity growth in enterprises, and dramatic changes in how and where businesses store data. Get the 2014 State of Storage report today. (Free registration required.)

Jonathan Feldman is Chief Information Officer for the City of Asheville, North Carolina, where his business background and work as an InformationWeek columnist have helped him to innovate in government through better practices in business technology, process, and human ... View Full Bio
We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
jagibbons
100%
0%
jagibbons,
User Rank: Ninja
11/17/2014 | 12:20:38 PM
Re: online storage was commoditized a long time ago
Being first (like Dropbox was on usability and sync across multiple platforms/devices) is great for a while. If you only rest on your laurels, you'll fall behind. This where Dropbox and Box are currently headed. I agree they need to offer something more. They need a new unique value to compete with Microsoft and Google or they'll be the ones acquired and integrated into oblivion.
Todder
100%
0%
Todder,
User Rank: Moderator
11/12/2014 | 11:46:48 AM
Re: Post-PC? How about mobile plus-PC
It's margins. Cloud storage is a commodity as was stated already. To survive you need a key differentiator. It would be cool to see OpenOffice align with DropBox or Box and compete in the office suite ecosystem with offerings that are comparable to Google of MS with their cloud integrations.
zaious
50%
50%
zaious,
User Rank: Ninja
11/11/2014 | 11:59:22 PM
Re: The New Netscape?
Oh! I would be sad if Box and Dropbox goes 'Netscape'. They really made the issue of file syncing look like a piece of cake.
peterchang01
100%
0%
peterchang01,
User Rank: Apprentice
11/10/2014 | 12:56:41 PM
online storage was commoditized a long time ago
Online storage became a commoditized a long time ago. In fact, Dropbox uses commodity cloud storage very effectively to drive its business. What Box and Dropbox brought to market was usability over commodity storage. That was huge from 2007 to 2013 as web and then mobile access became critical. But it's now 2014 and everyone has caught up. Web, mobile, and sync access are now readily available commodities. Online storage is no longer just a developer commodity. It's now a mainstream commodity for everyone. Can Dropbox & Box service? Only if they can do more. The opportunities are bigger than ever.
jastroff
100%
0%
jastroff,
User Rank: Ninja
11/9/2014 | 12:23:48 PM
The New Netscape?
Are Box and Dropbox the new Netscape? Will Microsoft do to them what they did to Netscape Navigator, i.e., offer the same service, but free or much lower priced and this drive them out of business? Along with other diversified competitors, like Amazon, etc., Box and Dropbox can't really compete on that level.
Thomas Claburn
100%
0%
Thomas Claburn,
User Rank: Author
11/7/2014 | 6:08:34 PM
Re: Post-PC? How about mobile plus-PC
I think the fact that Box hasn't gone public says alot about the challenges online storage providers face. Every service that generates real revenue will eventually be replicated by platform owners and then favored.
Charlie Babcock
50%
50%
Charlie Babcock,
User Rank: Author
11/7/2014 | 5:43:15 PM
Post-PC? How about mobile plus-PC
Fred, I think your comments on the "post-PC era" are right on. It's not that PCs and laptps haven't been offset by  devices that are more mobile and useful in new and compelling ways. They have been. At the same time, they haven't been fully replaced by those mobile devices and are unlikely to be. Some work functions simply don't yield to execution on a mobile device.
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
Commentary
If DevOps Is So Awesome, Why Is Your Initiative Failing?
Guest Commentary, Guest Commentary,  12/2/2019
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
Slideshows
Flash Poll