Dropbox Leads Cloud Storage Startups in Race With Google: Tech

Silicon Valley startups used to tremble when Google Inc. (GOOG) released a product very similar to their very own. Now? Not much.

On April 24, Google Inc. unveiled its long-awaited Drive service, which lets people store files online and synchronize them across all their devices. Drew Houston, the manager executive officer of file-syncing employer Dropbox Inc., goaded the juggernaut with a tweet: “In other news, @Dropbox is launching a search engine. :)”

Box Inc., another cloud-storage provider, hosted a previously planned party on a Manhattan rooftop on April 25. Chief Executive Officer Aaron Levie shimmied in suit and sneakers while Elijah Wood — yes, that Elijah Wood — manned the turntable. If the Box chief was panicked, he hid it well, Bloomberg Businessweek reports in its May 7 issue.

Houston and Levie have earned the correct to be confident. Their companies have lured Silicon Valley’s premier investors and millions of shoppers. Sequoia Capital , Greylock Partners or even Bono have contributed to a complete of $257 million in funding for Dropbox, valuing the corporate at about $4 billion. Los Altos , California-based Box has attracted $162 million from firms including Draper Fisher Jurvetson and Andreessen Horowitz. Bloomberg LP, the parent of Bloomberg Businessweek, is an investor in Andreessen Horowitz.

Technology ‘Everyone Needs’

“This is the type of technology — a la the telephone, Web browser, and e-mail — that everybody needs, and there just aren’t many products like that,” said Josh Stein, a managing director at Draper Fisher Jurvetson.

Box and Dropbox — consisting of a couple of dozen other startups in addition to Microsoft Corp. (MSFT) , Amazon.com Inc., and Apple Inc. (AAPL) — are engaged in a fight with huge ramifications for the way forward for computing.

Every year, people create a growing number of photos, videos, Word documents and other files. Increasingly, those data are scattered across phones, tablets, computers and other devices. The storage startups and their competitors are vying to be the central control panel for all this data.

“All of those companies see this future where your devices are basically portals to all of your stuff,” said Tom Kleinpeter, the previous chief technology officer at FolderShare, a file- syncing service acquired by Microsoft in 2005. “And whoever holds directly to all that stuff has a tremendous advantage.”

The story of FolderShare shows how hard it’s to get an easy-seeming technology inclusive of cloud storage to work properly. Founded in 2002, the corporate let people sync as many folders as they wanted among multiple computers — a freedom that was overwhelming to a couple.

‘Big Mistakes’

“One of our big mistakes was letting people do whatever they wanted,” said Kleinpeter. Many shoppers didn’t even grasp the fundamental syncing concept: that their computers had to be online together to swap files.

San Francisco-based Dropbox , founded in 2007, picked an easier approach. When users install its desktop or mobile apps, the service creates a single folder — a dropbox — on each device. Anything saved in that file is on the market on some other device.

While FolderShare required a web connection to work, Dropbox stores copies of every file at the computer or mobile device where it was created and on servers the corporate rents from Amazon. (AMZN) That implies users can work offline and sync everything later.

Single Folder

“Dropbox was brilliant picking that single folder thing,” said Kleinpeter. The startup now has greater than 50 million users, though it doesn’t disclose what number of people pay for storage above the 2 gigabytes given away.

Yesterday, Dropbox announced a partnership with Samsung Electronics Co. to preload its application on smartphones and tablets running Google’s Android operating system. The corporate has already signed similar deals for its app with HTC Corp. and Sony Ericsson Mobile Communications.

Box’s Levie opted to not concentrate on the buyer market — rightly foreseeing that it should place him in a brutal cost war with giants similar to Google and Microsoft — and has instead aimed to aid office workers.

Companies pay about $15 per worker monthly so their employees can store things like PowerPoint presentations, pictures for marketing campaigns and legal documents. Box’s tools let them grant access to pick co-workers, customers and partners and collaboratively edit documents.

Collaborative Editing

At the Manhattan party, Levie was hyping the Box Innovation Network — the universe of third-party software apps that depend upon Box for storage or collaborative editing. Finished tweaking the font size on a memo using Quickoffice for iPad? The app connects with Box so that you can send the general result to a co- worker or 0 LinkedIn Corp. (LNKD) 0 contact without resorting to bulky e- mails.

Levie sermonizes about this post-PC functionality — the 27-year-old college dropout basically thinks he can replace decades of 1 business software 1 produced by industry veterans — Microsoft, 2 International Business Machines Corp. (IBM) 2 , and 3 Oracle Corp. (ORCL) 3 — with this new breed of nimbler software that tightly ties together mobile and desktop computers.

The saying was once that no person got fired for getting IBM products, Levie told his troops.

“We’re not quite there yet, but we’re moving to an international where you may get fired for purchasing IBM,” he said.

Fending Off Bids

Both startups have fended off acquisition bids — including 4 Citrix Systems Inc. (CTXS) 4 ‘s greater than $500 million offer for Box –and say they need to stay independent in anticipation of initial public offerings.

Such ambitions make all of it the more important for the storage stars to outpace offerings from the tech giants. While Dropbox gives away 2 gigabytes of cupboard space today, Google and Microsoft give away 5 gigabytes and seven gigabytes, respectively, and charge lower prices for expanded memory. The startups’ hope is that consumers care about greater than sheer storage capacity. Box offers security measures prized by corporations as well as its collaboration tools, to illustrate. Dropbox, thus far, has concentrated on usability.

“The general philosophy at Dropbox is that it’s alright to write plenty of extra code in the event you can do away with one choice the user has to make,” said Tom Meyer, a former senior software engineer at Dropbox. “You are not looking for people to should make any decisions in any respect.” Especially the verdict to change.

To contact the reporter in this story: Ashlee Vance in 5 San Francisco 5 at 6 avance3@bloomberg.net 6

To contact the editor accountable for this story: Barrett Sheridan at 7 bsheridan3@bloomberg.net 7

Please enable JavaScript to view the 8 comments powered by Disqus. 8

Source