Dropbox takes a few steps forward, and one giant step back

Dropbox has definitely made a few ripples this past week, some of which indicate a significant step forward into maturing the company’s products, and others which may indicate that the company is still a bit immature, businesswise.

In recent months, Dropbox has taken advantage of the current investment spree in the tech sector to take on huge amounts of money. In January, the firm announced it had raised $250 million on a $10B billion valuation, a round that it kept open for a few weeks, bringing in a reported $400 million (see Dropbox, now valued at $10B, raises $250M). In April, the company announced that it had raised an additional $500 million in debt financing (see Dropbox continues raising money, and prepares for big announcement this week). What is the company doing with all that monty: they are growing the company: the are over 1000 staff at this point.

The company is also in acquisition mode. In late March, it aqui-hired the Readmill team (see Readmill shuts doors, team heads to Dropbox), and earlier acquired Zulip, a chat service that had already integrated with Dropbox (see Dropbox acquires Zulip, readies two-headed client). This latter acquisition is something I thought the company could quickly relaunch as a Dropbox chat capability — so that discussions could be associated with any dropbox file or folder. In fact I had anticipated that as the big announcement that was rumored for last week’s announcement, accompanying the general release of the two-headed client that allows users to have personal and work files managed in the same client app.

However, what the company showed  last week was something else, altogether, with the final state of Zulip technology still unclear. With great fanfare the company displayed a new application called Carousel, a photo sharing application for iOS and Android (see Dropbox adds better photo sharing capabilities), and gave a demo of Project Harmony, a new approach to in-document cowork (see Dropbox Project Harmony is breaking the rules).

At this point, Harmony only works with Microsoft Office files, but in principle — once Dropbox learns the format of other file types — its approach could be applied widely. Here’s a screenshot:

project_harmony

Dropbox is emulating the in-document commenting systems we’ve all used in Microsoft and Google docs. This offers some interesting avenues for cowork, since who better than Dropbox to deal with the problems of latency when multiple authors are working on the same document at the same time.

Still, Harmony is just the tip of the iceberg. Last year, Drew Houston made it very clear that the company plans its own productivity apps, and Harmony is certainly something needed for those, and which is just the bit that could be brought to market fastest.

The heaviest push has been on the Dropbox for Business end of things, where the enterprise capabilities of remote wipe, account transfer, and shared audit trails are now likely to satisfy the first set of objections of IT staff. There’s more to do on that side, which is one reason the company has brought on Dennis Woodside at COO. Woodside is from Motorola most recently, but more cogently he was head of sales and marketing at Google, where he led the push for Google Apps in the business side (see Dropbox makes Dennis Woodside its first COO). Woodside joins former Salesforce exec Ross Piper amd VMware chief architect Matt Eccleston (see Dropbox hires Ross Piper from Salesforce to speed enterprise adoption, and  Dropbox hires VMware chief architect Matt Eccleston).

But even with all that enterprise depth, the company is capable of misstepping. The current example is the choice of Condi Rice for the board of directors (see Condi Rice joining Dropbox board is a terrible idea). I agree that Dropbox would be well-served to get people with outside-silicon-valley experience on the board, which is composed of the founders and a bunch of VCs and tech entrepreneurs (and until Dr. Rice, all male). Nonetheless, a company that has had a few issues with security — when the first information about the NSA’s PRISM program was leaked, Dropbox was prominently about to join the program — and in a market niche where a reputation for safeguarding user and company information from all external agents, bringing aboard someone like Dr. Rice is an unwise move.

For all her accomplishments, her involvement in the build-up to the Iraq war — where the government fabricated evidence about ‘weapons of mass destruction’ — and her alleged involvement in government spying on UN security council members simply raise too many questions.

Couldn’t Dropbox, given its growing stature and huge resources, have found someone equally accomplished but with less baggage?

Note that Drew Houston opted to not make the announcement of Dr. Rice’s appointment to the board until after the big product announcements, perhaps realizing that the blowback would be immediate and loud. There is already a DropDropbox website gathering signatures, and thousands have tweeted that they are dropping the service. Even if the absolute numbers wind up to be small, the optics are terrible.

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Stowe Boyd

Stowe Boyd

Lead analyst Gigaom Research

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