Doom and Gloom for Dropbox and Box?


If you have been anywhere near twitter the past week, you’ve seen the article from ZDNet asking Can Dropbox and Box survive as independent services? The author, Ed Bott, then goes into the pricing competition for storage and how both services are falling way behind the curve to Google, Apple, and Microsoft.

Ed misses the point. This isn’t about storage. Not anymore. It is also about convenience. How well can you synch across all your devices with products from the big three? How well do those products work with other applications on your mobile devices?

Even more importantly, how well do those applications serve the enterprise?

The Enterprise Equation

People just want to be able to store their documents and pictures and find them wherever they may roam. They do not care about advanced features as long as their stuff is safe and they don’t have to spend a lot of time gaining access to what they want.

Organizations want more. IT may love basic storage to support their in-house applications, but basic  storage doesn’t help when managing content. We had that back in the 90s with files shares. Organizations have been scrambling to move off of them ever since.

This is the paradox of Content Management in the enterprise. People only want the basic features that are offered by Apple, Microsoft, Google, Box, and Dropbox. The rest is secondary. Organizations need more. They need:

  • Centralized security
  • Control over the content
  • The ability to surface the content in other applications
  • Basic metadata to track the business context

There is a difference between Content Storage and Content Management, which is what businesses require.

The Future of Dropbox and Box

How does this apply to Dropbox and Box? They are both adding enterprise features which means that the basic storage math doesn’t define them.

Box has been focused on the enterprise for years and provides a lot more value to organizations than basic storage. Box will do just fine as long as they keep investing in enterprise capabilities while maintaining the aura of easy to use.

Dropbox is trickier. They are late to the enterprise game. They have a few decent management features but are significantly behind Box in this arena. Dropbox also seems to be creating an enclosed garden of applications versus the open ecosystem of Box. This is their best approach as they have to differentiate themselves from Box in this area.

Of course, Dropbox has a dramatically larger install base, a better known brand, and inertia on their side. People are not very willing to change providers when content migrations are involved. Dropbox’s current valuation also makes the acquisition from any vendor that doesn’t have a ton of excess money lying around unlikely.

The question for Box is simple, can they start closing more large enterprise deals to make their Annual Recurring Revenue (ARA) tick past the tipping point? As for Dropbox, can they create more value in their product before they get lapped by the big boys?

Neither of them are dramatically threatened by the decreasing price of storage. They just need to focus on their core value and make sure it is communicated to the market.

2 thoughts on “Doom and Gloom for Dropbox and Box?

  1. On the surface, I would tend to agree with your analysis. Here’s the part that scares me: What if, I as the IT/ECM guy realize that everything you say is correct but my boss says “I’ve read 10 articles this week saying storage is free.” Admittedly, we have had to fight that battle before on other fronts, but I worry.

    When you have to take up the “we have to spend money to get additional features” flag and carry it into battle, life isn’t fun. Theory won’t cut it, practical, solid, in-your-face evidence is going to be required. And, Box et al are going to have to make getting that additional value, dirt simple if they are to have a good chance.

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