The Web's 800-pound gorilla has landed in the cloud. Google is leveraging its existing relationships with hundreds of millions of users as it drums up business for its new cloud storage and file-sharing service, Google Drive. Can smaller cloud storage providers survive this assault?
"When the 800-pound gorilla jumps in the pool, it usually makes a splash. It doesn't mean it can swim well. There is room in the market for multiple players, but Google's entry puts pressure on the competition, especially smaller players," said Gartner analyst Michael Gartenberg.
Gartenberg noted that, like Apple and Microsoft, Google has relationships with a millions of people who use its various applications and services, including Gmail, Google Docs and the Chrome Web browser. Those relationships give Google an advantage as its woos consumers to its new storage and synchronization service.
While Google Drive will no doubt compete with Microsoft's SkyDrive and Apple's iCloud, the companies most threatened by Google's move are smaller specialized service providers, such as DropBox, Box, SugarSync and YouSendIt. Those sites have appealed more to technology enthusiasts, not average consumers. But when it comes to market penetration and new product sales, existing relationships with everyday people matter.
"[Average consumers] don't have much of a relationship with these smaller [cloud] companies," Gartenberg said. "The challenge for these smaller companies is reaching out to consumers or shifting to somewhat of a different market; the problem is that Google also wants the business market, the small business market and ultimately the enterprise IT market."
In a statement responding to Google's entry into the cloud storage market, a Dropbox spokesman said his company does "one thing," and it does it better than anyone else.
"Companies of all shapes and sizes have tossed in their hats over the years, but we've stayed ahead by building the best possible experience and making a product that millions of people love," he said.
But on Dropbox's own online users forum, there were 3,000 posts that mentioned Google Drive, some from people who indicated that they were already defecting. Price was a major incentive.
Google offers 5GB of capacity for free and allows an upgrade to 25GB for $2.49 a month, 100GB for $4.99 a month or 1TB for $49.99 a month. When you upgrade to a paid account, your Gmail account storage will also expand to 25GB. On an annual basis, Google Drive charges $60 for 100GB.
Dropbox offers 2GB for free, and its first paid upgrade option is to 50GB for $9.99 a month or $99 per year.
One Dropbox online forum user who identified himself as Ritchie H. wrote: "Goodbye Dropbox - Hello Drive. 200GB for $9.99? I think that's what is known as a no brainier [sic]. Security Schoomaty!"