Dropbox shows it still can defy tech giants
IN THE age of the tech giants, start-ups face daunting odds. Through aggressive acquisitions, blatant mimicking of smaller rivals, and the built-in advantages of their user networks and Internet infrastructure, tech titans rule the scene. But at least in the case of Dropbox, an online file- sharing company, it’s still possible to defy them.
During its market debut last month Dropbox’s value leaped nearly 40 per cent, a jolt of optimism that arrived in the middle of a tech industry backlash. The success of Dropbox’s initial public offering came despite facing big-name, multi-billion- dollar competitors, such as Google, Microsoft, Amazon.com and Apple. Dropbox’s stock is up almost 50 per cent from its IPO price.
But beyond the company’s public market splash, experts say Dropbox can effectively compete with much larger, dominant tech companies because of its focused strategy and distinct services, its ease of use and the customer loyalty it has built up.
Founded in 2007, the same year that Apple released the iPhone, Dropbox became a compelling alternative to do-it-yourself file storage.
For many people at the dawn of the mobile era, that process was cumbersome and restrictive, as anyone who has tried to email themselves dozens of vacation pictures or frantically searched for a lost thumb drive can attest. In its filings with the US Securities and Exchange Commission, Dropbox phrased its foundational aspirations this way: “Life would be a lot better if everyone could access their most important information anytime from any device.”
Dropbox’s business relies on selling file storage subscriptions to individuals and teams within companies. Users can save text documents, pictures, music and other types of files to Dropbox’s system, which makes that material accessible across their devices. People can also share stored information with others. The basic version of Dropbox is free, but paid subscriptions, which start at US$ 9.99 ( RM38) a month, offer additional features and more space to save files. More than 500 million people have registered to use Dropbox. But only a fraction of them, 11 million, pay for it.
According to the SEC filings, Dropbox generated US$ 1.1 billion in revenue last year, up 31 per cent from 2016. The company has not reached profitability, but it reported that its losses are shrinking, from US$ 210 million in 2016 to US$ 111 million last year.
Of course, a triumphant tech IPO doesn’t guarantee long-term success – just ask Snap. The parent company of Snapchat, the social media app that lets users share pictures and videos that disappear after a set time, went public last year. Its stock price climbed more than 40 per cent before slumping to its offering price of US$ 17 a few months later. Snap is now trading below that. Twitter, too, dazzled investors during its IPO in 2013, but it has struggled to keep its footing.
But analysts said that online file storage is a strong business with future growth, and that Dropbox has set the standard in this space. Microsoft, Google, Apple and Amazon all have file sharing services - OneDrive, Google Drive, iCloud and Amazon Drive respectively.
But what sets Dropbox apart, experts said is that the service allows people to share and edit files across disparate platforms - from Word documents to Google Doc files, a speciality that’s harder to displace. Its competitors are set up to keep customers within their own ecosystems.