Can Dropbox, other cloud providers survive Google Drive?

Google's low pricing is attracting the attention of existing cloud users

The 800-pound gorilla has landed and is leveraging its existing relationship with hundreds of millions of users to port them to their cloud storage and file sharing service Google Drive. Can smaller cloud storage players 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 Research Director Michael Gartenberg.

Like Apple and Microsoft, Gartenberg noted that Google has a relationship with a millions of consumers who use its Gmail, Google Docs, Chrome web browser and any number of other applications. Because of those existing relationships, Google has an advantage in being able woo existing customers over to its new storage and synchronization service.

While Google Drive will no doubt compete with Microsoft's SkyDrive and Apple's iCloud, the companies more at risk are smaller specialized service providers, such as DropBox, Box, SugarSync and YouSendIt. Those sites have appealed more to technology enthusiasts, not average consumers. And, when it comes to adoption, relationships matter.

"They don't have much of a relationship with theses 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 space, 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.

Yet, on Dropbox's own online users forum, there were 3,000 posts with regard to Google Drive, and some users were indicating 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 is 50GB for $9.99 a month, or $99 per year.

One user who identified himself as Ritchie H. stated: "Goodbye Dropbox - Hello Drive. 200GB for $9.99? I think that's what is known as a no brainier. Security Schoomaty!"

John E wrote: "Drive: $60 a year for 100GB. Dropbox: $99 a year for 50GB. My $99 yearly plan just auto-renewed and I don't know if I feel good about it in light on this weeks news. I really want to stay with Dropbox (because I think they are better), but the difference in price/space is large enough to consider switching. I hope that Dropbox responds, for their sake."

And Daniel W. wrote: "Google Drive is going to devastate Dropbox. I hate to say it, Google being the big bad corporate machine and all, but Dropbox is going to [hemorrhage] users unless they dramatically lower their prices (which could even require being bought up)."

John Webster, a senior partner with Evaluator Group, a market research firm that specializes in data storage issues, said Google is so large and profitable that it can easily spin up a service and undercut the competition. "If they want to drive smaller players out of the market, it's possible they could," Webster said. "They could make it more difficult for smaller players to make a buck."

Chris Yeh, vice president of platforms at Box, a cloud storage service aimed at businesses, said while he's wary of Google's entry, it also validates what his and other companies have been doing for years.

"One of the things that really struck me ... is that it was really hard when we founded Box to get someone to care about this space," Yeh said. "So there's definitely a part of us feeling that this week has been a good one for us."

Yeh also knows that while Google Drive is currently aimed an consumers, it won't be long before business-class offerings that allow IT managers administrative control, will emerge.

"I think they start from a very strong position because they have a Google Docs franchise that's not only popular with everyday consumers but businesses as well," he said.

Box also has a strong partnership with Google and its Documents storage service. Google Docs apps can open files within Box. The company also has a strong relationship with Google Apps in their store.

"So on one hand we like working with Google and on the other hand, we know we'll see them in the field," Yeh said. "But it will take a while to catch up from an enterprise point of view. We've been in this business for some time."

For example, Box allows multiple email domains to exist inside the same enterprise account, allowing different business groups to have their own email accounts for collaboration purposes.

"It's not earth shattering. But it's one of those things that illustrates the level to which you must focus when you're serving the needs of a specific customer set," he said. "It's really those kinds of unsexy things that is part of the reason you win deals, especially with big companies."

See more by Lucas Mearian on

Read more about storage in Computerworld's Storage Topic Center.

Copyright © 2012 IDG Communications, Inc.

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