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Dropbox Says Controlling its Own Tech Makes it Faster, Nimbler

Barb Darrow
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Barb Darrow
Barb Darrow
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Barb Darrow
By
Barb Darrow
Barb Darrow
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July 11, 2016, 8:33 PM ET

Dropbox, the cloud storage company that says it has half a billion users, now says it’s well on its way to 200,000 paying business customers. And Dropbox CEO Drew Houston is banking that its new home-built infrastructure will help it save money and be more flexible when building new features.

In March, Dropbox disclosed that, over the past few years, it had moved about 90% of its IT infrastructure off of Amazon (AMZN) Web Services and into its own data centers. That migration seemed counterintuitive in an era when many companies are shutting down data centers or foregoing new ones in favor of putting their work into Amazon’s public cloud.

“We’re planning for the long term, this was a foundational thing,” Houston said at Fortune’s Brainstorm Tech conference on Monday in Aspen, Co.

He also stressed that, given the amount of data Dropbox handles it is somewhat unique in its IT needs. It also continues to use AWS for some tasks and for global reach.

“It’s a big bet we placed,” Houston added speaking of the migration. “We went from zero to standing up one of the largest cloud infrastructures in the world.”

That required moving several hundred petabytes of data from AWS to internal servers without users noticing.

Houston and Dropbox chief operating officer Dennis Woodside said upcoming Dropbox features are tied to its data center migration. They include “Project Infinite,” which will let users view all their files from a device without actually downloading them.

Cloud computing had a wild and wooly week.

Dropbox will enable that via smart caching, Dropbox’s newfound ability to modify the data center hardware it uses is very different from what is allowed in the public cloud scenario, Woodside told Fortune before the talk on stage.

Dropbox, of course, has lots of users who do not pay. Neither Houston nor Woodside would comment on what percentage of that 500 million number are active users. Paying customers, on the other hand, pay for either Dropbox Pro or Dropbox Business for cloud storage and file synchronization. Dropbox competes with Box, as well as products from software giantsMicrosoft, Google in this tightly contested market.

The 200,000 number surfaced during a panel discussion on Monday.

Dropbox Strengthens Mobile Support, Gets Closer to IBM

“We are on track to pass the 200,000 teams mark for Dropbox Business, which was launched less than five years ago,” Woodside said before the event. “It took eight or nine years for Salesforce (CRM)to get to 100,000 teams.”

Dropbox, like many software companies of its era, got its start offering free or near-free software but is now is eager to show it can woo paying customers as well as it pushes towards profitability.

The company claims big accounts including Hewlett-Packard Enterprise (HPE), News Corp., and Expedia (EXPE), which it says has 4,000 users on Dropbox. Woodside seems particularly proud of that account given that Expedia is a spin out of Microsoft (MSFT). And more recently, the Washington Post has a few thousand users on Dropbox, he said.

“What we see is significant growth especially in enterprise class companies. Our enterprise business selling into companies with over 1,000 employees has grown triple digits in past year,” Woodside said in an interview before the event. No specific numbers were forthcoming.

Woodside also said that 52% of the Fortune 500 has paid Dropbox for a deployment of some kind, although would not comment on whether any of those deals were company wide.

Dropbox claims its advantage is that it “plays well with all ecosystems.” That means Dropbox works well for users in the Apple (AAPL) or Microsoft (MSFT) or Google (GOOG) worlds to create and refine their documents.

The company, which has raised over $600 million in funding, is threading the needle here. It says its cloud storage and file-sharing software works better across various software platforms (Microsoft and Google, for example) than either of those two companies do because they want customers to stay on their own software all the time.

None of those tech giants, the pitch goes, is particularly anxious to make its own software work well with products from its mega-rivals, which means it probably makes more sense to use Microsoft OneDrive for Microsoft (MSFT) Office files and Google Drive for Google (GOOG) Apps.

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That’s basically the same argument Box (BOX), the other major independent player in this market, makes. Box, unlike Dropbox, started out with a corporate focus. But as Dropbox ramps up its business push, the two are competing more directly.

But Dropbox also argues that all those consumer users are its best sales people. “They bring us to work,” Woodside said. The implication here is that Dropbox is easier to use than Box, a contention that Box chief executive Aaron Levie would no doubt dispute.

 

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Barb Darrow
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