Can Dropbox Survive the Emergence of Amazon's Zocalo? | TechWell

Can Dropbox Survive the Emergence of Amazon's Zocalo?

Amazon recently rolled out Zocalo, an enterprise storage service that lets people store and synchronize files. Another popular cloud storage provider, Dropbox, is also built on Amazon's S3 service. Will Amazon's entry into the storage-as-a-service segment spell doom for other providers, such as Dropbox and Box.net?

A question like this takes us back to the 1990s and Microsoft's dominance of the software world. Microsoft demonstrated the power of platform by making nearly seventy independent browsers almost extinct by including Internet Explorer as a part of Windows OS. It rendered the same blow to the TCP/IP network software companies when it started including TCP/IP stacks with Windows 95 OS.

To win the battle of cloud platforms, Amazon seems to be heading down the same path as Microsoft. This intention is validated by the fact that Amazon also entered the desktop-as-a-service segment late last year.

Dropbox recently added a host of new features to its service for business users, which has helped them remain relevant in the eyes of customers. In addition, customers see a great value in Dropbox being a platform-independent service that works on any device and OS.

Another perspective when looking at the value of independent cloud storage providers was when Steve Jobs described Dropbox as being "a feature, and not a product." Even though Dropbox recently added various new capabilities, bigger providerssuch as Amazon with mammoth resources at its disposalcan easily replicate the same.

For Amazon, selling storage space as a service will be a small source of revenue or simply a value-add to a host of already built capabilities in Amazon Web Services (AWS). For a provider like Dropbox, it is the prime revenue source.

Amazon's dominance as a technology infrastructure platform via AWS is explained by Howard Tullman's "Nothing Is More Powerful Than a Platform":

Platforms are central to the "winner-take-all" realities of the world of technology and they help to create the inevitable concentration in these markets where one or two winners outdistance the field and then enjoy disproportionate and substantial profits for as long a time as their dominance persists.

Amazon may have all the power to dominate the cloud storage segment, but specialized providers like Dropbox can look to take a bite out of the market like Mozilla Firefox and Opera, who managed to survive on their own despite browsers being included as part of the OS.

However, Dropbox will need to create innovative pricing strategies, remain aggressive in retaining existing customers, and evolve their service. Unless that happens, the era of independent storage vendors may diminish sooner than later.

Given its loyal customer following and platform independence, Dropbox may continue to make its presence felt. But in the long run, Dropbox will find it hard to maintain its competitive position unless it’s a part of a bigger platform provider.

What do you think?

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