Dropbox Caught Between Warring Giants Amazon and Google

An anonymous reader writes: Google and Amazon are both aggressively pursuing the cloud storage market, constantly increasing available storage space and constantly dropping prices. On its face, this looks great for the consumer — competition is a wonderful thing. Unfortunately, many smaller companies like Box, Dropbox, and Hightail simply aren't able to run their services at a loss like the giants can. Dropbox's Aaron Levie said, "These guys will drive prices to zero. You do not want to wait for Google or Amazon to keep cutting prices on you. 'Free' is not a business model."

The result is that the smaller companies are pivoting to win market share, relying on specific submarkets or stronger feature sets rather than available space or price. "Box is trying to cater to special data storage needs, like digital versions of X-rays for health care companies and other tasks specific to different kinds of customers. Hightail is trying to do something similar for customers like law firms. And Dropbox? It is trying to make sure that its consumer-minded service stays easier to use than what the big guys provide." It's going to be tough for them to hold out, and even tougher for new storage startups to break in. But that might be the only thing keeping us from choosing between the Wal-Mart-A and Wal-Mart-B of online storage.

Comments

Re:I seem to remember...

[geek]

Would be a shame to see it get destroyed through aggressive anti-competitive practices.

Fuck off. Everything you posted IS COMPETITION. Dropbox refuses to compete. They offer 2 tiers and ridiculous prices. If they had offered me a 30GB plan I would have jumped at it but my money is no good to them. Instead I would have to beg for "extra" space and game the system. So FUCK dropbox. They wont offer what I want so I've gone elsewhere. Thats called competition.

Dropbox use AWS

[a.koepke]

Amazon have never chased the consumer business, they don't want that. Their focus is fixed on supplying IT services which companies can then build their solutions on. Dropbox is powered by AWS, they are the wholesale provider.

Amazon reducing their prices should only be a good thing for them as that will reduce the operating costs of Dropbox.

Re:Dropbox use AWS

[Solandri]

I was going to post that too. But while googling to make sure Dropbox still used Amazon S3, I came across this article. Apparently the problem for Dropbox is the price volatility. Amazon can lower or raise its prices on a whim because they don't have much competition. Dropbox doesn't have that luxury.

Re:Dropbox use AWS

[Voyager529]

That said, perhaps DropBox could sell a self-hosted version of their software and bring over their ease-of-use.

That's already been done.

The challenge DropBox faces with a self-hosted iteration of its software is that it stops being 'simple'. Existing Dropbox clients would have to be completely rewritten to go from asking "username and password, please" to "username, password, server address, and port, please". Even if we hand-wave away that problem by assuming that users can either correctly type a server name and port number, or that Dropbox will still have 'accounts' but essentially become a DynDNS clone and simply handle network traversal and matching users to their data repositories, we then have to deal with the Dropbox Server software. There may be a market for Dropbox to sell drives like these, but I don't see Western Digital wanting to partner with Dropbox to provide redundant functionality to their existing apps, and I don't see consumers paying more for a Dropbox branded drive if they're already in the "self-contained NAS" market - a handful might, but now Dropbox, for all intents and purposes, finds itself with all the challenges of being an external hard drive vendor...with the added bonus of directly competing with the vendors from whom they're sourcing their parts.

The obvious alternative to this would be for them to sell their software and let it run on a LAMP/WAMP stack, on whatever hardware is on hand, and market it to the enthusiast/enterprise market, like UnRAID or Nexenta. That might be a short term win, especially if they do some fancy stuff with LDAP/Active Directory integration. Conversely, I see it potentially being a support nightmare based on how it deals with storage. Will it install on an Ubuntu desktop containing a hodgepodge of hard disks? Would it be more like FreeNAS where it makes its own software RAID, but requires hardware to be dedicated (or its own VM)? Even at that, how do they bill for the software? One-time use seems like it wouldn't be a good long-term plan, but I don't see too many users being okay with Dropbox charging them an annual fee to use their own hard drives. CALs could be a useful method (arguably the most workable one), but they'd have a hard time managing their consumer-friendly image on one hand with Oracle-style licensing on the other.

Levie is right; 'free' isn't a business model. Dropbox's 2GB number is only sustainable because they're betting that a certain number of those users will go for a paid tier. Either every Dropbox customer will pay, or they start advertising, or they data mine. To my knowledge, those are the three business models that have sustained themselves on the internet. 'Everyone Pays' may be a viable model if Dropbox can do things like sell gift cards for their service (for users unable/unwilling to fork over their Mastercard) and come up with the right formula of how much customers are really willing to pay for storage+ubiquity+simplicity. Although Levie must certainly be feeling the pinch from Microsoft's 1TB of OneDrive for $60/year, the one client we attempted to migrate to that service went back to dropbox VERY quickly because the desktop client was utter crap; I'm left to believe that Dropbox's simplicity still has an edge just yet. Conversely, I don't think that $50/month for 500GB is worthwhile, either - That's only slightly less than it'd cost to buy a 500GB hard disk outright from Newegg every month.

Dropbox is still a well-recognized brand that I'm certain many consumers are still willing to pay a premium for, and Microsoft and Google are competing not only with more storage for less money, but with integration as well - editing a spreadsheet in Sheets or Excel and seamless saving of attachments is not the kind of thing that Dropbox can effectively compete with.

Re:Dropbox use AWS

[Amouth]

We tried ownCloud first, ended up with a complete mess of files as the client is very dump and only works if there is a perfect clock sync between all clients and everyone is on a low latency high bandwidth client.

Considering we are working with multiple people on the road in spotty net connection areas with laptops from different companies whose clocks differ a small bit we ended up with a gigantic mess of conflicts and 0 byte files which lovingly got propagated.

Needless to say our testing of ownCloud showed it to be far from ready for production use.

Also their documentation and reliance on community forums was very sad to say the least.

DropBox is terrible

[goruka]

Unlike Google which uses ownership to determine size used, you can run out of space in DropBox by someone sharing you a large folder. DropBox also make is impossible from the web interface to see the sizes or usage of files to make room or clean up. I ended up paying Google for 100gb because their service is simply better.

Re:BTSync

[Noah Haders]

i was super jazzed about bittorrent sync because I learned about it around the time Dropbox bent over for NSA and welcomed Condi on board. I don't support companies like that. but my work started blocking bittorrent ports and I'm afraid I'll hit some automated logging system becuase I'm running on a bittorrent client on my computer.

so I'm still looking for a good alternative that's not dropbox. I'm trying out sync.com, it's based in CA so it's immune from normal stupid warrants. but I might go to spideroak and get the full encryption. if it's good enough for snowden it's good enough for me.

Re:Fighting for all of our stuff

[ShanghaiBill]

It's nice that all these huge companies are so interested in control of everyone's data.

Just encrypt your files before you put them in your shared folder. Or just set the folder to automatically encrypt. There are dozens of "how to" webpages that explain how to do this with DropBox and TrueCrypt, and it isn't hard to do it with other services.