Online File Storage: Gigabytes and Pricing Are So Last Year

The key to strategic growth is in your mind, literally.

When it comes to online file storage, aka, The Cloud, the value creation process is similar to that for pretty much everything else related to enhancing the return from supporting the interface between technology and the rest of the human experience. First you provide power and volume, then you have to add something distinctive or you run the risk of becoming just another low margin vendor of commodity services.

Which means that gigabytes and everyday low prices will bring 'em in but won't keep 'em coming back. Because the key to successfully providing services is now adding value by helping customers identify, interpret and apply the information you are storing for them and making it both useful and profitable.

While hardly revolutionary, but then not every enterprise is equipped, staffed and oriented to providing additional services. That this almost certainly will do is differentiate the survivors from everyone else. JL

Marcus Wohlsen reports in Wired:

If companies like Box and Dropbox are trying to sell customers on what each can help them to do with their data, quibbling over how many gigabytes they’re using becomes a losing strategy.
If you still think storing files online is all about who offers the most gigabytes for the lowest price, you weren’t there when Jared Leto showed up at BoxWorks, Oscar in hand. The actor-musician, who won this year’s Best Supporting Actor award for Dallas Buyers Club, joined Box CEO Aaron Levie onstage at the online file-sharing startup’s San Francisco conference on Wednesday. Within minutes, his gold statuette was being passed around the crowd of IT nerds for selfies.
“It’s been an amazing year,” Levie quipped to Leto. “Now, you’re capping it off at an enterprise software conference.”
Not that Leto painted his appearance as a letdown. Instead, he launched into seemingly earnest praise of the capacity of technology—including, of course, Box—to make life and work better for artists. Appearing toward the end of the more than two-hour keynote, Leto was clearly scheduled to add a jolt to the proceedings. But the presence of such star power also telegraphed the idea that, a decade after Box first launched, today’s file storage companies are about way more than disk space on a server. And, as everyone from Box to Dropbox to Microsoft to Google are well aware, they have to be.
In its earliest incarnations, the “cloud” was about sparing the annoyance of carrying around files on an external hard drive or emailing them to yourself when you wanted to work on something at home. And a decade ago—when Box was just Levie’s college project at the University of Southern California, and MIT undergrad Drew Houston hadn’t even thought of Dropbox yet—eliminating that annoyance was probably enough. But now—when a terabyte of online storage costs 10 bucks a month, and having your files on your computer, tablet, and phone is taken as a given—just keeping and syncing files is considered the least anyone can do. Cloud companies are now in a race to show how they’re different from every other cloud company. Dropbox is counting on great design and ease of use to carry it through. Levie revealed his plan: He wants Box to burrow deep into specific industries to make cloud tools and services that work the way those industries do.
Box for Industries is intended as the company’s “next act.” In practice, it means apps that give retail clerks personalized data on customers who walk into their stores. It’s a HIPAA-compliant backend for doctors to transfer patient x-rays to third-party tablet apps. It’s a place for Jared Leto to manage his digital marketing company while he’s touring with his band.

Price Is No Object

Corporate IT heads now take it as a given that their companies have uploaded much of how they do their work, Box head of engineering Sam Schillace told WIRED during a sit-down after the keynote. “So now there’s a lot of: ‘Okay, then, now what?’ What value can I add? Now that I’ve moved into the cloud, what’s the next step?”
Box’s move into industry verticals is its gambit at answering that question for companies as soon as it’s asked. By seeking to build expertise in industries from healthcare and retail to entertainment and education, Box is hoping to set itself apart as a software company that can double as a kind of consultancy best qualified to tailor its products to specific business’ needs.

When a terabyte of online storage costs 10 bucks a month, just keeping and syncing files is the least anyone can do.

The move is an interesting contrast to Dropbox, which has also been moving aggressively to promote its own products for businesses. But Dropbox also has a huge business in consumer file-storing and syncing. Last week, Dropbox slashed the price of its paid consumer product to $9.99 per month for one terabyte.
But the cut wasn’t about competing on price. Yes, until last week, Dropbox had been more expensive than its competitors. But it’s not trying to undercut them. It’s simply hoping to take price out of the conversation in order to let what sets Dropbox apart to shine through, specifically design and usability. For its part, Box basically eliminated storage limits for all its corporate customers earlier this summer. If companies like Box and Dropbox are trying to sell customers on what each can help them to do with their data, quibbling over how many gigabytes they’re using becomes a losing strategy.
“I think the era of generic storage providers is drawing to a close,” Schillace said. “If you’re really, literally just trying to compete on price these days, you’re doomed.”