Silicon Valley darling Dropbox is launching several efforts to grow its business—a deceptively simple cloud storage service—beyond early adopters and techies. It’s doing so in the face of increasing competition from giants such as Apple, Amazon, Google, and Microsoft.
Dropbox’s position is both enviable and daunting. The company has seen its user base rocket from 25 million to 45 million since April, and it recently secured $250 million in funding from several venture capital funds, giving the company an estimated value of $4 billion.
At the same time, Dropbox is likely to face increasing competition from some even more popular, and well-funded, companies. Having declined Steve Jobs’s offer to acquire the company in late 2009, CEO Drew Houston admits to experiencing a sinking feeling when Apple announced its iCloud service, which remotely backs up images, music, documents, and other data and syncs that content between different Apple devices. That service closely resembles Dropbox’s.
Dropbox offers consumers two gigabytes of storage for free, 50 gigabytes for $9.99 a month, or 100 gigabytes for $19.99 a month. The new service, Dropbox for Teams, which has been in beta for the past year, is aimed at companies. It will provide a terabyte of storage for five users, along with administration tools and support, for $795 per year. Additional user licenses cost $125 per year and come with 200 gigabytes of additional storage. The company estimates (based on business e-mail addresses used) that over a million businesses already use Dropbox. “What was originally conceived of as a consumer thing turned out to be one of these things people brought to the workplace by the millions,” says Sujay Jaswa, Dropbox’s vice president of business development and sales. He says it was an obvious step to offer companies a version even more suited to their needs, including perks such as phone support.
In a crowded market for online storage, Dropbox has stood out for the simplicity and quality of its offering. Installing the software creates a normal-looking file on a computer; storing documents in that folder makes them available to any device running Dropbox’s software. Since it would be impractical to upload new copies of a document each time a change was made, Dropbox software takes snapshots (called “delta syncs”) of a file and only relays information about necessary changes back to the company’s cloud servers. “If you’re working on a design file, sending a delta from Italy to Argentina is way, way faster than sending a whole file,” says ChenLi Wang, who leads the effort to move into business services at Dropbox.
Jaswa and Wang confirmed that the technology will be integrated into the operating system on “virtually every” HTC device starting in early 2012. HTC users will also get free additional Dropbox storage for a limited time. Dropbox is already built into Sony Ericsson Android phones sold in some European countries, and in Sharp phones sold by Softbank in Japan. These deals could be a key move, since data is increasingly created and accessed on smart phones. Along with Apple’s iCloud, Microsoft offers cloud storage for smart phones, through the Skybox service for Windows Phone 7 devices.
Jaswa argues that Dropbox has an advantage over these services, because it’s designed to work on any device. “People are going to have an Android phone and an iPad,” he says. “They’re going to have a PC at home and a Mac at school. Building a service that works equally well on all these devices is the most important thing.”
But to attract big business users, cloud services need to convince IT managers to let valuable company data to reside outside their control. This means persuading them that a service is as reliable, and secure, as anything built and maintained in-house. Dropbox is trying to highlight the reliability of its technology by pointing out that it runs on Amazon’s cloud service.
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