As appeared on ZDNet. January 21, 2015
By Rachel King
See original article here.
It's a truth universally acknowledged that businesses and their leaders are subject to criticism, constructive or not, for better or worse. That sentiment only compounds when a company decides go to public, and suddenly everyone has an opinion, constructive or not, often for worse.
Many tech darlings are finding themselves extra scrutinized these days as financial analysts and venture capitalists continue to debate whether or not we are in another Dot Com-like bubble. Some would argue there isn't even enough critical examination going on as startup after startup seemingly appear in headlines touting repeat multi-million dollar infusions of cash from investors, prompting many to question the value of these emerging companies.
Box, an enterprise-geared cloud storage and collaboration platform, has been trying to prove its value and battling criticism since launching in 2004. That goes from answering pointed questions about exorbitant spending rates on marketing revealed in its S-1 last year to simply justifying the cloud storage element as an easier (and more secure) replacement to the USB thumb drive.
As the Los Altos, Calif.-headquartered company prepares itself for a long-awaited public debut on the New York Stock Exchange on Thursday, tech industry analysts and competitors alike are debating whether Box's delayed IPO was a rare demonstration of patience in a vertical that can't seem to slow down - or rather a case of too little, too late.
"Box is likely overrated in terms of their market presence because their sales and marketing spend has given them a very high profile. That said, they are underrated in terms of breadth and depth of their offering," reflected Rob Koplowitz, vice president and a principal analyst at Forrester Research covering serving application development and delivery professionals.
Part of the disconnect, Koplowitz suggested, is that Box is often mischaracterized as a file storage, sync and share solution.
Rather, he continued, Box's platform is much more powerful and extensive, positioning Box as a more robust competitor in the long run against the likes of Microsoft SharePoint and One Drive, Google Drive, DropBox, EMC Syncplicity by Axway, Cirix ShareFile and "other 800 pound gorillas."
Chris Walker, an analyst at Digital Clarity Group covering enterprise information management, concurred that Box is often "wrongly categorized," sometimes to its detriment from a PR standing point.
"If you look at analyst reports and various press they're being categorized as cloud storage, enterprise file sync and share, or enterprise content collaboration. Box isn't any of these," Walker posited. "Box is content management, delivered via a subscription model, with a pretty cool user experience. Many people don't realize it, but Box is the next incarnation of Enterprise Content Management."
Walker speculated that Box is actually underrated based on the "fundamental changes that they're pushing into content management, governance, collaboration, and workflow."
"Box is in a position to compete against legacy Enterprise Content Management vendors and win," Walker said. "I've got clients that are looking at ECM platforms now, I'm not hesitant to throw Box in front of them as a viable alternative."
Jeetu Patel, general manager of EMC Syncplicity by Axway, still dropped Box into the enterprise file sync and share market category, pegging Box as one of the top five players in this space going into 2015 along side his employer on top of Microsoft, Google, and Dropbox.
"I can't speak for the investors, but I will say that Box's decision to go public is validation for this hypercompetitive, hyper-growth market," Patel said. "With such a strong market, Box has the opportunity to grow and continue to be a major player, but this will ultimately be decided by the strength of their product and how they can wow users and win over IT departments - as it is for all of us competing in this space."
Vineet Jain, CEO and co-founder of enterprise cloud company (and Box competitor) Egnyte, argued Box needs to shift away from its increasingly vertical-specfic strategy.
"There is a collective recognition in the enterprise that not all data will go to the cloud and therefore Box is limiting its own ability to fully penetrate the enterprise market," Jain postulated. "From a competitive view, cloud players with hybrid capability and horizontally integrated solutions will continue to take Box out in the enterprise - especially at the high end of the market, further slowing their growth trajectory."
On the contrary, Tom Scearce, a senior marketing manager at infrastructure software maker Novell, countered that Box's vertical-focused agenda is one of its defining strengths and exactly what makes it stand apart from the crowded pack.
"They do an excellent job of tailoring their messaging (and in some cases, their feature set) to industry-specific use cases. It will be truly impressive if their sales execution - at the enterprise level -- can match their marketing across all the industries they aim to serve," Scearce explained.
Koplowitz said he will be watching to see whether Box is able to not only continue to drive market share but do so at a price point that demonstrates value for the full platform. "They cannot let large vendors commoditize the market and drive down margin," he warned.
Nevertheless, Jain gave Box the benefit of the doubt, as far as the balance sheet is concerned, speculating most people understood the delay after its S-1 update at the end of 2014.
"Their initial filing came at a tough time where there was a bit of a dark cloud (excuse the pun) cast over the space, with the tech markets going through a bit of a correction. Now, as long as the public markets remain healthy and Box can continue to improve their bottom line, they can have a successful debut," Jain remarked.
Opening days on Wall Street are often polarizing in the sense that they're typically viewed as either smashing or disappointing. But the following initial months can be volatile as well. Based on the near-microscopic attention Box has experienced since announcing plans to go public last March, 2015 could likely be much more tumultuous.
"Fairly or unfairly, Box's IPO delay has largely been perceived as related to questions about Box's business model," Scearce reflected. "So a slow start out of the gate would likely be seen in the same light, rather than as a verdict on the overall market."
Acknowledging he's not a financial or stock market analyst, Walker believes Box will do well as more people take notice of its platform and product improvements, establishing itself as an enterprise class content management platform.
"Ultimately, I think investors feel more excitement than caution after the delay," Jain added. "There has been quite a bit of hype from their marketing department, which has made press, analysts, and investors alike all eager to see what happens. Pair that with unforeseen, successful IPOs by fellow enterprise SaaS providers Hortonworks and New Relic, and Box may just have the right formula for a successful IPO on its own accord."