Dropbox is now public. This will bring along many changes and possibly many challenges. What does this mean for corporate, organizational, individual and other types of users? How will the market adapt, and what is the best long-term option for cloud management? There are more questions than answers, and there are also many options, and clearly Dropbox, Amazon, Google, Microsoft, Apple, Citrix and others are not going anywhere, so there really is no wrong answer.

The concerns in decision making however are both real cost and opportunity cost, and file management and sharing plays such a significant role in today's global digital world. No one knows exactly how storage and sharing will evolve, but we have a few theories based on our experience that may help you make the best decision whether to implement Dropbox as your primary, secondary or occasional cloud management resource.

Why is Dropbox great?

Everyone uses Dropbox. It has set the bar for simple cloud storage and file syncing. It works well for both large and small files, and is fast and flexible. Ease of everything is Dropbox's core feature. We use Dropbox, and so do many of our clients. Many organizations that use Dropbox also use a combination of other overlapping services such as Office 365, iCloud, Google Drive, Amazon Web Services, ShareFile, FTP sites, and a few other options. Generally, from our experience, few people and organizations rely on only one cloud service alone, and most utilize a combination of multiple cloud services as well as traditional storage on external drives, SSD, desktops and laptops, and even flash drives.

Dropbox is a great product at a fair price. It has maintained a slight edge in ease-of-trial usage and overall ease-of-use, and is looking to capitalize on its market position financially through partnerships and a new IPO. The IPO will undoubtedly improve its short-term outlook, however the real question is whether Dropbox can maintain or expand its value in the long-term. Can it get cheaper? Can it get easier? Can it become more integrated with operating systems and browsers? What value added features will bring in new customers? The core product is great. Can they make it greater?

Why is Dropbox potentially greatly overvalued?

Dropbox has over 500 million users, however only 11 million are premium (paying) users. This is only about 2% of their users. This tells you how much 98% of their users value their service - as a free public utility. Their current market cap is about $6.7bn, which is about $600 per premium user. The opportunity is in converting a larger share of the 98% into premium customers, and they have a great chance to do that, so there is a potentially huge reward to the minimal risk. The real concern is the long-term investment and reliance on a system that may eventually be less efficient, less useful, or more costly than alternatives.

Dropbox is easily replaceable. Users aren’t passionately loyal to the Dropbox brand, and there is no extra value or benefit from using Dropbox over any other competitive or substitute product other than there is a good chance whoever you are sharing files with may already have a login, use the tool before, or can figure it out without much hassle on any device. While it works great, nothing about Dropbox is truly unique, fun, profitable, engaging or impressive. It's a utility and necessary requirement for digital work and life.

The biggest strength for customer retention is difficulty of migration, but that is neither a selling point nor a valuable feature. Vertical integration in technology has become a powerful tool for product development, and creates an unfair competitive advantage to restrict competition. Much like App stores and browsers, the closer you are to the customer, both perceived value and intrinsic loyalty increase exponentially.

Who should drop the box, hold on to it, or pick it up?

By all means, don't stop using Dropbox, and don't make investment decisions on Dropbox's stock based on our opinions, however in the long-term, if you are going to put your cloud file storage and sharing in one basket, we likely would not recommend Dropbox as that catch-all but more as a useful backup service based on accomodating customers and partners preferences. In the long-term we shouldn't have to worry about file storage, sharing, backups and versioning. In the short-term, we have to remain realistic, and when things change so frequently it's best to have a Plan A, a Plan B, and a lot of flexibility.

Our recommendations are based on each client and partner's unique requirements and operations. For some, we recommend private cloud systems, Amazon or Microsoft Azure solutions, while others can work best with Google Apps or Office 365, and there are cases for Apple, Adobe Creative Cloud, and a range of other options that fit each specific case. Your industry may have regulations for storage and security, and you may need offline storage and backups as well for other purposes. Each situation presents its own challenges, weighing the best options for cloud management based on a range of factors. We tend to lean toward simplication through consolidation where possible, and it is becoming easier to recommend other solutions that may streamline workflow or reduce long-term costs as long as they can compete with the simplicity that Dropbox is known for.

If you need to share a file quickly, Dropbox works great. If you need to integrate it into your entire company and day-to-day operations, it's not as simple of a solution. If you use Salesforce, Dropbox now has some added value. If you use Google, Microsoft, Apple, Amazon or another ecosystem, it might be better to minimize overlapping or disparate solutions. The pressure from shareholders will surely cause Dropbox to think outside of the Dropbox for more ways to add value and remain price and features competitive. We foresee expanded partnerships and acquisitions in their future, but the long-term outlook is still a bit cloudy.

As the cloud evolves, we will adapt accordingly & prepare for a rainy day.

And we will still always accept a Dropbox invitation to keep things simple and easy for those we work with. After all, as a digital agency, we are much more interested in the content in the files than the utility to store and share them. It's just another tool in the box.

 
Written by

AdEasel

AdEasel® is a professional, full-service marketing and advertising agency based in the Midwest with principal offices in Chicago, Des Moines and Minnesota.

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