News / November, 2015

Dropbox goes enterprise (again). Too little, too late?

Read Original article here -

Dropbox has long been a Silicon Valley darling. Its star, however, has waned a little in recent years. Will the company's new enterprise focus help with that?

Dropbox has, since its inception, seen meteoric growth. The reasons for that are fairly self-evident. Dropbox is the case study for virality. Its file sharing solution is widely-regarded as the easiest solution in the space to use and its approach of allowing new users to quickly and easily come on board the platform has seen it become the poster child for viral growth.

But alongside that awesomeness that growth brings comes a flip side. Dropbox may have impressive user numbers, but it has had a hard time converting that into meaningful revenue.

The reasons for this are fairly obvious. The broader enterprise file sharing and synchronization (EFSS) space is incredibly busy -- Box, Microsoft OneDrive, Google Drive, Syncplicity, Egnyte and dozens of other vendors all offer variations on the theme. Add to that the fact that Dropbox has always been a very consumer-centric company and you have a problem. Dropbox's founder, Drew Houston, certainly understands making a product that consumers love. But as for an understanding of what it takes to build an enterprise company, and all the additional features, functions and messaging aspects that requires, he has been something of a slow learner.

Dropbox does have an enterprise product and has, over the past several years, been building out more of the enterprise-level features (security, audit, control, integrations, etc.) that enterprises need. The company recently reported that it has over 150,000 business customers, although what this means in terms of revenue and growth potential remains to be seen. For perspective, Dropbox also revealed that it has 400 million regular users and, that of those 150,000 business users, 50,000 of them were added in the last 10 months.

Dropbox has, finally, realized that it needs to partner broadly to achieve enterprise sales success. It has announced a handful of partnerships, in this case with Synnex, Ingram Micro, Dell and HP Enterprise. By way of comparison, Box has been actively courting partners since 2013 and also counts Ingram Micro as a reseller.

Part of the difficulty that Dropbox has, other than the obvious economic tensions created by supporting an absolutely monstrous number of users who don't actually pay for the product but who cost money to service, has been the fact that it needs to justify its $10 billion valuation. Some of Dropbox's formerly bullish investors have already admitted that their shareholding is worth less than they'd hoped -- in particular BlackRock and Fidelity have downgraded their holding value in the company.

All of this is why Dropbox recently bolstered its enterprise product in an effort to build this lucrative revenue stream. The new Dropbox Enterprise is a tier of services on top off the existing business product that are aimed towards larger enterprises. The enterprise tier includes domain management, collaboration insights, premium integration and development support, deployment support and user training, with an assigned success manager. Dropbox is also finally compliant with the health industry's HIPAA standard. Important to note that it is two years since arch-rival Box ticked the HIPAA box (pun intended).

One addition to the enterprise product that is of particular note is "Collaboration Insights." The feature allows users to generate reports that show external sharing with various kinds of people, such as suppliers, partners and customers. The company also has a new "Dropbox Paper" tool/app which allows users to communicate with their team in a centralized and secure workspace, alongside important key documentation.

Both of these features are already offered by many other players -- one competitor, Huddle, pointed out to me what the release of these features means for Dropbox:

Today's Enterprise and the recent Paper product announcements are long overdue from Dropbox as they struggle to justify their huge valuation and make genuine inroads into the enterprise market. It represents a continuation of their efforts to lift themselves from the carnage of the consumer and SMB storage markets in which they are competing against everyone from Box to Microsoft to Google to Amazon. It is quite simply essential that they do this if they want to avoid the perception of becoming a dead (or dying) unicorn like Evernote has become.

Well, you can always rely upon Alastair Mitchell, Huddle's president and cofounder, to tell it like he sees it. Mitchell is, obviously, a competitor with some ulterior motives. He does, however, have some valid points about the tension that Dropbox faces and went on to state that, for Dropbox:

It’s a classic case of being stuck between a rock and a hard place. On the one hand the market demands premium enterprise features to get them out of the free storage market, but on the other hand they are now fighting in two huge markets, both of which they are destined to lose unless they focus on one. The new enterprise "features" are no more than table stakes in the enterprise market. And the "Paper" product is a nice gimmick but is never in a million years going to be a credible replacement for Office or Google Docs in the enterprise. The market for basic "sync and share" moved on 3 years ago to much deeper team and content collaboration, where billions of dollars are spent each year enabling enterprises to be more productive and successful, both internally and also externally with the extended ecosystem of customers, partners and suppliers. It’s here that genuinely transformative innovation is occurring and where other players have a long lead on the traditional storage and file sync and share vendors.

All valid points from someone who, while having unquestionably ulterior motives, understands this space intimately. Dropbox isn't going to disappear anytime soon, but whether it can ever justify its current valuation, or grow to be a true enterprise company, remains to be seen. Perhaps a prisoner of its own success, Dropbox has a very rocky path ahead of it.

DemoSee How it Works

Call Sales1-888-908-4276
or We'll Call You

Live Chat

Thank you.
Our team will contact you soon!