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Babbage

Science and technology

Dropbox

A nebulous future

Dec 22nd 2012, 11:31 by A.R. | OXFORD

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.

Dropbox dominates online file-sharing. It boast three times as many users as its closest direct rival, YouSendIt. (Its dominance is even more pronounced when it comes to the volume of data stored.) It eats up 20% of all bandwidth consumed globally by browser-based file-sharing services, against 1% for YouSendIt. Dropbox users save more than 1 billion files every day. 

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.

Dropbox relies on individuals and small firms, for whom its rudimentary security features are good enough; bigger businesses with sensitive information prefer more secure services like Box.net. The advent of competitors in the nebulous form of iCloud, Google’s Drive and Microsoft’s Skydrive, which come pre-installed on their respective makers' gadgets, does not seem to have dampened enthusiasm for Dropbox. Unlike iCloud, which boasted 190m users by October thanks to its deep integration with Apple's mobile devices, the service is "platform neutral"—ie, works across different devices and operating systems—and allows easy file-sharing, both useful traits in an increasingly connected world where few people hew devoutly to a single device-maker. 

Google and Microsoft clouds emulate Dropbox in these respects. But at a little over 10m users each, they do not yet benefit from from the incumbent's powerful network effect. If you are sharing files with a dozen other people on Dropbox, a move to Google or Microsoft would require all 12 to move with you.

Dropbox is also striving to make itself the default choice for smartphone users. In 2011 it struck a deal with HTC, a Taiwanese phonemaker, to preinstall Dropbox on its Android devices. In return it gives HTC users 5GB of space for free. HTC has been struggling of late, but Mr Ferdowsi says that his company is in talks with other manufacturers, hoping for similar arrangements.

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. And Google can advertise its cloud across its myriad online offerings. Dropbox's margins are only likely to get wispier in the future.

Readers' comments

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Kioi

LArge corporations cannot be stupid enough to share secrets with strangers. Cloud is for small SME's and individuals.

Linhkien Game

There is only thing hindering their monetization, streaming media. Once the bandwidth is there, dropbox will have a huge headstart. People won't be sharing their files. I currently use google drive because of its integration, but it's clearly behind dropbox and other upstarts in terms of ease of use.

maximillianwyse.wordpress.com

I'm a little hesitant to entrust my data to a content provider, such as Apple. Terms of service usually allow them to disable an account at their sole discretion, with or without cause, as Amazon has done to Kindle users without explanation.

Content companies seem likely to have a broader set of automatic flags for shutting down accounts than storage-only firms, and at least some of those flags are apparently not obvious to users. I think I'll stick to firms like Dropbox, and remain a little obsessive about backups.

B. Schaaf

SugarSync does the job for me and I like that I can share any folder, not just one that Dropbox required me to use the last time I tried it.

SET Sail

Storage is very much like a commodity, and it is only good to give business to the likes of Dropbox and Box.net, otherwise the big boys would never lower their prices.

Having used both, plus the traditional "private" storage, I would point at even newer solutions like the Manugistics presented at VMWorld CA recently as a neat means to make yourself a semi-private storage on cloud and include collaboration. Collaboration is way more relevant than just storage.

Jeffrey S

I partner with another contractor on a project basis. We use Dropbox for our shared files. It's simple and really helpful compared to emailing versions like we did in the past.

PaulTopping

I agree with Steve Jobs. Cloud-based file sharing is going to become a standard OS feature. I don't really see how DropBox and the rest of its independent competitors are going to last. As we saw in the '90s on desktop OSs, any feature useful to most of a devices users will sooner or later get incorporated into the OS. On top of that, these services are more-or-less interchangeable with their only difference being price and capacity. Both of these can be changed easily and, therefore, do not represent unique features with which to lock-in customers.

Asprin

icloud as an IT technician is very hard to work with, consider an application which constantly expects itself to be online when someone hands you their PC to be fixed, endless message boxes interfereing with normal operations. The user HAS to log out to stop it, there is no other option to stop the behaviour. Programs that potentially are a problem are windows live which gives an option to have manual starts (Start/computer/manage/services) (), game clients(Steam, Orgin) and most Anti Virus Software. Very bad practice, bad for the user unless its the Anti Virus Software because the users interest is coming last - after all its the users bandwidth, data cap, memory and processing time.

The problem with dropbox is that it is easy to use, share data across platforms and it is based in the US; it does not encrypt data and markets itself towards professionals in Europe who should know better than to use a FREE service hosted outside the EU with confidential data in violation of EU data protection rules - and does not warn the user of this in any way that a non technical person would understand. Cloud services should be served with a privacy health warning. My main example would be a Headmaster storing pupil data from sims pages in Excel documents in Dropbox, to those who know this is an export from SQL database which would have all the pupils home and contact data stored in the document. Because users never encrypt the pages we are relying on chance and goodwill in what has become a major hacking target for the data harvester. But they still do it.

Gad Heilweil

" If you are sharing files with a dozen other people on Dropbox, a move to Google or Microsoft would require all 12 to move with you."

This sentence is factually wrong.
You can share files or folders with anyone even if they are not subscribed.
The truth of the matter is that there isnt any real difference in the functionality of any of them. The winner/s will be the ones with the most reliable cloud.

James JR in reply to Yawar Amin

Perchance for active editing Gad refers to the fact that one needn't be logged in to a Google account to group edit a file (at the same time) on Google Drive, and thus the 12 others need not shift services.

Yawar Amin in reply to James JR

Just tried that. Didn't work. Followed the instructions on https://support.google.com/drive/bin/answer.py?hl=en&answer=2494822&topi... to email a link to a file stored on Google Drive to an alternate email address that Google doesn't know about. Then opened the link in a browser which isn't signed in to Google. It took me to a login page.

Even if it _had_ worked, that would've been in-browser editing. Not in-app editing and collaboration as with a Dropbox file.

jomiku

The neat thing about Dropbox is they've made it very easy to share files across platforms. You can be given access to a dropbox very easily. It actually reminds me of the old "public folder" idea only done better.

A number of my programs and apps - if those are really different things - use Dropbox for synching. For documents of my own, I use iCloud because it translates those into iOS format so I can work on my iPad. The messy bit is I have to download from iCloud to my Mac because the file formats aren't the same. That means I get a version in iCloud and some older version on my Mac and have to worry about confusion there.

jomiku in reply to jomiku

The one time I didn't back up a document and merely saved it to iCloud didn't work. I opened Pages on my iPad and the synch failed. That seems to have set the latest revision as the one on the iPad though that was older than the actual revisions done elsewhere. So it wiped out my work.

I can't trust this without redundancy. It needs to save versions or it's not very useful because I have to upload and download each time to make sure I don't rely on it. Not good.

Ari Herzog

It is interesting you don't mention Google Drive until the very end. I'd consider that to be a closer competitor to Dropbox than Microsoft/Apple cloud systems for the proprietary factors you suggest, whereas Google Drive can be installed as an app on an Android device as well as an Apple device.

Marek Foss in reply to Ari Herzog

All three services (Dropbox, MS SkyDrive, Google Drive) can be used on Apple, Android and Windows Phone devices as apps. Moreover, all 4 of them (above 3 + iCloud) can be used on Mac OS and Windows personal computers.

s3HurRJLip in reply to Ari Herzog

None of the competitors are usable in an enterprise context. The reason is one that the Economist omits, because the Economist is written by/for MBAs who think it's all a marketing difference.

The actual difference is that Dropbox has a technological advantage; it uses a significantly better underlying sync algorithm. For corporate teams sharing or modifying large files, or updating encrypted volumes, the competitors use so much bandwidth as to be unusable.

Dropbox is the only viable enterprise option. The rest are consumer toys.

blueblock7

Earlier this year, we unplugged our network server and went to Dropbox for Teams. It's terrific, not least because any file is now accessible from anywhere on any device. We do pay for the service, but at only 25% of our previous IT costs.

About Babbage

In this blog, our correspondents report on the intersections between science, technology, culture and policy. The blog takes its name from Charles Babbage, a Victorian mathematician and engineer who designed a mechanical computer.

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