Dropbox Hosts Developer Conference


DropboxHow much longer can Dropbox charge for something everybody else is now offering for free?  The answer to that question seems to involve developers.  Dropbox DBX was held Tuesday, the company’s first ever developer conference.  New developer resources were announced.  There was also a Q & A session with questions about the company’s business model and monetization plans.  The one-day conference was by all accounts “no frills”.  Despite Dropbox’ $4 billion dollar valuation, the only swag they could afford to give away was a coupon for their own service.  Tuesday’s conference was Dropbox’ most recent effort as it faces increasing competition.

Drew Houston, Dropbox co-founder, gave the conference keynote address.  Mr. Houston says Dropbox now has 175 million registered users, up from 100 million users in November 2012.  Not provided were details of how many of those users actively use the service and/or are paying customers.  96% of Dropbox users don’t pay for the service, according to Forbes.  Remaining users pay for plans that start at $9.99/month.  Unofficial estimates indicate paying users resulted in as much as $500 million dollars of revenue for 2012.

Dropbox Platform was introduced at the conference.  Dropbox Platform is the collective term for the existing Sync API and new Datastore API.  Datastore API enables app developers to use Dropbox for “simple databases for… settings, contacts, or any other content that users create.”  Dropbox also announced the availability of its Chooser to access Dropbox files on iPhone and Android.  A new developer Drop-in was also released called Saver, which “lets users save files from your app directly to Dropbox with a single click.”

The Q & A session for press, attended by TechCrunch, had at least two questions regarding the Dropbox business model.  Asked about revenue from advertising, Drew Houston stated that Dropbox has no plans to monetize through advertising.  In response to a similar question, Mr. Houston also said the company has no plans to make money by charging developers.

Questions about revenue and monetization are an increasing concern for a company like Dropbox.  Cloud storage competition is greater than ever.  File hosting services were not big business when Dropbox launched as part of YC Summer ’07.  Now, the operating system makers all offer their own solutions: Microsoft SkyDrive, Google Drive, and Apple iCloud.  Those companies also own their own infrastructure.  Dropbox, however, relies on Amazon Web Services.  And even Amazon.com has started offering their own consumer Cloud Drive.  Dropbox may provide better service, but price is a factor for most consumers.  Many already feel that Dropbox is overpriced compared with other services, reports CNET’s Dara Kerr.  Dropbox’ reliance on a third-party company for its hosting is a weakness that affects both its pricing flexibility and long-term profitability.

Enterprise competition is also a threat.  Just two months ago, Dropbox launched its Dropbox for Business.  Entering that market means competing with companies that specialize in big business solutions and have more experience.  Those companies include Box, Salesforce.com, and Workday.

Dropbox needs developers to remain relevant.  The consistent Dropbox user experience across multiple platforms is its greatest strength.  However, Dropbox is still an after-market product.  History in the technology industry has repeatedly shown that less sophisticated defaults have almost always prevailed against more powerful add-ons.  To win over developers, Dropbox needs to show a lot more appreciation for their efforts than a cheap coupon.

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