File sync and share vendors at crossroads

Tools

As we look at the online storage and file sharing business, we've watched it develop from simple sync and share to something more. That had to happen of course as one-dimensional tools tend to get subsumed by others or commoditized.

Commoditization happens when a tool becomes a basic feature, making it more and more challenging to squeeze out profits. We've seen this play out as every enterprise content management provider out there recognizes the need to provide file syncing and sharing as a basic service, and has purchased or developed this capability, whether it's EMC buying Syncplicity, Opentext developing Tempo Box or HP (NYSE: HPQ) launching HP Flow.

Throw Google (NASDAQ: GOOG) Drive and Microsoft (NASDAQ: MSFT) SkyDrive into the mix, and the field is getting a bit crowded, isn't it?

That could explain a number of recent moves by online file sharing vendors that suggest they are attempting to move outside the box (if you'll pardon the expression) and differentiate themselves from the pack by being more than pure online storage, and file syncing and sharing services. 

How is this playing out? There are numerous examples and strategies in play.

Dropbox is attempting to move from a consumer service to a business one with Dropbox for Business, while Box has been beefing up security and making some strategic purchases, buying Crocodocs and Folders in recent weeks, in an attempt to widen its service offerings.

Then there's the battle of the niches, as file sync and share companies try to differentiate themselves in different ways such as:

This had to happen of course. In an interview last year, Aaron Levie told me that file sync and share was table stakes. That means he recognized at a fundamental level that it's just the first step into the enterprise, not the final one. 

Looking for other ways to endear itself in the enterprise, Box has developed APIs and a platform onto which companies can build new services. They can also build Box services into other applications. It's also worth noting that Box hired Sam Schillace as senior VP of engineering last year. He came to them from Google where he was the engineering director leading the development of Gmail and Google Docs among others, suggesting perhaps that Box could be branching out in other directions in the future.

Meanwhile, Microsoft has linked Office 365 and SkyDrive, providing online storage and sharing services for the myriad of Office and SharePoint users out there who are ready to take the leap from local or networked storage into the cloud and want to continue to operate in the comfort of the Microsoft ecosystem.

In addition, Microsoft has made it clear that it's going all in on the cloud with SharePoint 2013 and is finding ways to incorporate Yammer, the cloud-based enterprise social service it purchased last year, into the mix.

Google has answered this by making it easy for Office users to open and edit Office documents in Google Docs with QuickOffice both on the web or on mobile devices, and to share and edit documents easily in the cloud.

All of this is happening as individual employees and companies in general are growing more comfortable with mobile, social and the cloud, as these trends are beginning to mature and take hold in the enterprise.

IT and vendors alike recognize that content is in motion, and while not all IT pros are happy about this, most are beginning to understand on some level that protecting content in motion is the new content management imperative.

And the file sync and share vendors understand this too and they are looking for new ways to lure you to their products and services beyond pure file sync and share functionality. And it's going to be interesting to watch this play out over the coming year because players who can't find clear ways to differentiate themselves are likely to be subsumed into larger organizations, leaving a few key players left to battle it out, a scenario we've seen play out in other fields related to content management including search and enterprise social applications. - Ron