According to an IDC report, IT spending on both public and private cloud storage segments will be worth $22.6 billion by 2015. Growth will be driven by an annual 24% increase in the public cloud segment and a 29% increase in the private cloud segment over the five-year period from 2010-2015.
Besides enterprise IT spend, increased demand for media, including music and video content on the Internet, has spurred the growth of consumer and smaller enterprise cloud storage. Apple remains a large provider of cloud storage services to consumers. But California-based Dropbox is catching up. A survey conducted by Strategy Analytics on 2,300 connected Americans found that 27% users used Apple’s iCloud storage services, followed by Dropbox’s 17% share. Amazon’s Cloud Drive came in third, with a 15% share, and Google Play was used by 10% of those who were surveyed.
Dropbox has seen rapid adoption of its services since it was founded in 2007. In November last year, they crossed the milestone of 100 million users, quadrupling their user base within a year. For a company of its size, Dropbox should take pride in that user base given that Apple’s iCloud has a user base of 190 million.
Like most others, Dropbox operates on a freemium model for individuals and a paid subscription model for businesses. Individuals can sign up for a 2GB data storage account with Dropbox free. Users can buy additional storage of upto 100 GB at a price of $99 a year. Dropbox sells other features such as version history and recovery at costs of $39 a year. For businesses, Dropbox sells its storage on a per user basis. Prices start at $795 a year for a five-user option, and the service comes with premium features of unlimited storage space, version history and recovery, security setting and phone support. They do not disclose their financials, but analysts estimate that Dropbox had revenues of $240 million in 2011.
Dropbox remains venture funded, and their latest round of funding of $250 million held in 2011 valued them at $4 billion. Overall, they have raised $257.2 million in funding from investors, including Sequoia Capital, Hadi Partovi, Ali Partovi, Pejman Nozad, Accel Partners, Index Ventures, RIT Capital Partners, Valiant Capital Partners, Benchmark Capital, Goldman Sachs, Greylock Partners and Institutional Venture Partners. According to market reports, Dropbox is now getting ready for an IPO by the end of this year. They are rumored to be talking with financial institutions to prepare for the IPO.
Meanwhile, to continue expanding operations, Dropbox has been acquiring several organizations. Last quarter, they acquired the email client Mailbox for an undisclosed sum. The acquisition announcement came in within a month of Mailbox’s release of their mobile app. Dropbox plans to leverage the acquisition to cater to the need of email to share attachments. Now Mailbox users will be able to receive Dropbox attachments inside messages.
In December 2012, they bought photo aggregation and sharing service, Snapjoy. Snapjoy lets users collate an online photo library from multiple devices such as phones and camera and from multiple services including social networking sites and photo uploading sites like Flickr. The acquisition will help Dropbox offer value added options such as a digital photo center instead of just being a place to store files. As part of their expansion of high value add offerings, Dropbox also acquired Audiogalaxy, a Seattle-based personal music streaming service. Audiogalaxy’s tools let users stream owned music content from a hard drive to a mobile device. Dropbox plans to leverage Audiogalaxy’s media streaming expertise through the acquisition.
Last year, Dropbox also acquired tablet marketing player TapEngage. San Francisco–based TapEngage’s tools enabled advertisers and publishers to collaborate on advertising that is focused on optimizing the table advertising space. Dropbox will be able to use TapEngage’s experience in mobile computing to expand their offerings for smartphones and other mobile devices.
Dropbox has clearly made the freemium model work, and their highly anticipated 2013 IPO would be interesting to watch. It will, no doubt, be a multi-billion dollar offering, depending on how frothy the market gets. Time will tell. One thing is true: the company has built a real, solid business, and no matter how crazy speculators get over their stock, they cannot take that away from the founders!