What is the future of DropBox?

The last post was about DropBox and I am inclined to write more about this brilliant service. Some call it a product, some call it a service. I consider it a boon for professionals like me. It seamlessly solves the problem of carrying around USB sticks and also depending on platform specific tools/services to accomplish the same thing that DropBox does. But what is the future of DropBox? Where will it go next? I thought I will share with you my thoughts on this

There is an interesting anecdote from a few years ago. Before Apple launched iCloud in 2011, Steve Jobs allegedly offered to buy Dropbox, a file-sharing service founded in 2007, for $800m. When Dropbox declined, Apple’s late boss disparaged it as a feature, not a company. Soon after, Dropbox raised $250m, putting its value at over $4 billion. Earlier in December Dropbox concluded a promotional campaign that, in just a few weeks, added 2m new users, bringing the total to over 100m, roughly double the number when Jobs made his comment. Consumers, it seems, can’t get enough of the feature.

Admittedly iCloud and Google Drive and not to mention Microsoft’s SkyDrive are competitors. And big ones at that, all the three mentioned here are available as default options in the respective mobile platforms that the companies own. And hence they have a default market share. Even Ubuntu has it’s own cloud storage service. So the market is getting crowded. And very crowded at that. There is no denying that.

But I believe that DropBox will persist and stay on top. Why? Simple, it works the same way on ALL platforms, all the earlier mentioned proprietary ones included. And that is their USP.

DropBox has a large user base. Most of them use the free version of the service. The company makes money by charging for extra storage. Around 4% of users plump for the premium version, though the proportion is growing, according to Arash Ferdowsi, one of the Dropbox’s co-founders. The recent campaign, called Space Race, gave away free space to university students in return for getting their peers to sign up to the service. The hope is that when access to this extra storage runs out after two years, the students, by then freshly-minted professionals, will pay to keep using it.

The other area where DropBox is making huge inroads is with mobile device makers like Samsung, Sony and others. The minute you buy a device made by them and log on to DropBox from these devices, you instantly get 50GB storage free for a year. Now in that one year, you will get so used to putting stuff in your DropBox that after the free period is over, you will not mind paying a few dollars to have the service continued. That is a brilliant stroke of marketing!

A bigger long-term worry is the plummeting price of digital storage. With its vast scale, Amazon has driven down costs substantially for the likes of Dropbox, which leases server space from the e-commerce giant. But Google Drive already offers 100GB for $5 a month, half what Dropbox charges for the same amount of storage.

If they get their margins and volumes sorted out, I guess then DropBox can compete on even keel with Google or Box in a big way.

So in summary, I see DropBox ruling the roost in a big way in the days to come, but only if they keep innovation, alliances and pricing in the right perspective. Let me know what you think



One comment on “What is the future of DropBox?

  1. Pingback: Google gDrive and Gmail take on Dropbox | Tim Batchelder.com

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