Dropbox eyes up the enterprise


by Ben Sullivan| 21 January 2014

Now valued at $10bn, where is all the money going to go?

Dropbox, a cloud storage provider, has closed a $250 million round of funding, which has resulted in the valuing of the company at $10 billion (£6.1 billion).

The latest investment was spearheaded by BlackRock, and makes up the total amount injected into the storage firm over £500 million.

Reports suggest that the company is now looking to head into the enterprise market, with Dropbox introducing Dropbox for Business last year. Over 200 million users choose Dropbox for their free storage, but individual users can pay a small monthly fee to increase storage amount, with businesses paying up to $15 per user per month with a minimum of five users. The business option includes more advanced controls like tracking, transfer and the ability to remote wipe files.

On its announcement of the intention to head into the enterprise in November 2013, Dropbox was only valued at $8 billion, meaning a sharp rise in the past two months could help realise visions. Before that round of funding, CEO of enterprise collaboration provider Workshare, Anthony Foy, said the startup would need a much higher market share of the B2B market to achieve such a valuation, and would find it difficult to break in. The criticism could still stand, with Dropbox facing fierce enterprise storage rivals in firms such as Amazon and Google.

He said: "The company would need to be showing huge traction in the B2B market, which already has established players.

"Dropbox will find it difficult to shake off its reputation as a consumer storage application, and B2B companies will not be shy in challenging it on the security and control of its applications."

He acknowledged that there is "huge room for growth" in the cloud storage and collaboration applications market, estimated to hit $21.6bn by 2016, but claimed that consumer and B2B firms take different approaches.

"Companies that start off as consumer-based need to restructure their company's DNA and application architecture to meet the demanding requirements of the business community. This takes time and costs them market share," he added

Further back, in 2011, Dropbox was only valued at $4 billion.

Paul Steiner, Managing Director of EMEA from Accellion agreed with Foy's skepticism, and told CBR:

"Large investments of the kind recently enjoyed by Dropbox are nothing new. However, it should be said that the majority of this new funding is likely to be spent on supporting the huge costs required to maintain the data centres relied on by their fremium consumer and small business users.

"It's true that enterprise is a desirable place to be for companies like Dropbox and Box, but given the costs involved, it's unlikely that we'll see either of them playing in this space any time soon."

Earlier in January, Dropbox users were unable to access the website and mobile apps, which the company blamed on a glitch in its server upgrade process.

The company denied hacking claims, calling them being 'a hoax', after several Twitter accounts of hacker groups claimed responsibility for disabling the services.

"This was caused during routine internal maintenance, and was not caused by external factors," it said in a statement.

"We are working to fix this as soon as possible. We apologise for the inconvenience."
Earlier reports said hacker group "The 1775 Sec" had claimed on Twitter that the move was carried out in memory of internet activist Aaron Swartz who committed suicide and died on the same day last year.

The storage firm's latest status update noted: "Dropbox should now be up and running for all of you, but we're working through a few last issues with the Dropbox photos tab."

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