One of the interesting developments in software and cloud in the recent years is the so-called file sync and share space that started to shape up in mid to late 2000s. Back in 2011 I spent a few months researching this space as part of a strategic project with a previous employer, and continued to cover it through early 2013. At the time start-ups such as Dropbox and Box were getting good traction and were reporting impressive adoption and growth. These vendors were getting impressive valuations and funding and a few got acquired. The growth, however, was primarily in number of consumer-oriented users, which didn’t necessarily translate to revenue, given the freemium model that most of these vendors use.
Consumerization of IT and BYOD have been well in effect in this segment. As consumers and prosumers adopted these products, businesses took notice and vendors started to position their offerings for business and enterprise use cases. Vendors big and small from different backgrounds were entering the space by either developing their own solutions or acquiring it.
The segment has continued to grow and evolve over the last few years. Major analyst firms including Gartner and Forrester have also started to cover the segment and benchmark the vendors. Here I will provide an overview of this space and take a brief look at the vendor landscape.
What is File Sync and Share?
The value proposition for file sync and share is fairly simple and effective: store your files in the cloud securely, access them from different devices, and share them with others. More specifically, file sync and share provides the following common capabilities:
- Store a file (in the cloud) such that you can access it any time and from any device (including mobile devices such as smart phones and tablets).
- If the file (or a copy of it on any of the devices) changes, then the copies on all other devices sync up to the latest version.
- Share a file with another user or potentially a group such that if a member of the group changes the file, all other members are notified or get get coies of the latest file. This provides a foundation for collaboration capabilities.
The following graphics depict these basic use cases. On the left a user stores the file in the cloud via a laptop or a smart phone and can access it in the other. Any time he changes the file on one device it can sync with copies on other devices. In the graphics to the right, a user shares a file with another user using any enabled device. This may be a transfer of a large file that email is not capable of handling. A more interesting use case is when she shares the file with the other user as part of a work group. Any time one of them changes the file, the system can sync and make the latest available to other user. This capability opens up the opportunity for collaboration that obviously has a higher business value than just an isolated file storage. Capabilities such as annotation and commenting may be added.
File sync and share products have the following characteristics:
- The storing, syncing and sharing capabilities must be secure; e.g., utilize SSL and encryption. They must also support proper access control and access rights for different types of users.
- They must be easy and intuitive to deploy and use. This may seem obvious but it should be re-iterated. This is no traditional complex IT system that requires months and an army of consultants and IT staff to customize, configure and deploy.
- Mobility is an integral. They must allow mobile access and at least some basic functionality on smart phones and tablets running iOS and Android at the least.
- It should be cloud-based. While there may be small desktop applications and mobile apps to operate them, the storage is typically done in the cloud. Some of the offerings such as Accellion also support on-premise, private cloud and hybrid (e.g., a combination of cloud and on-premise) deployments.
These are general requirements, but in going from consumer and individual use cases to business and enterprise use, there are additional requirements for security, scalability, and compliance that must be met. Single sign-on (SSO), integration with directory services and existing content repositories are also crucial for serious business use cases. Availability of open APIs may also be a requirement for some customers and partners who’re looking to re-brand an offering or build value-add solutions on it.
In terms of architecture and technical details the most interesting capability is the sync, especially in collaborative and multi-user situations. When a file is updated, how is the latest copy pushed out to other devices? What happens when several users are working on the same file? Is this even allowed? Different vendors have taken different approaches to solving these problems. The technical details is outside the scope of this post.
A Glimpse at the Market
The user adoption among the leading file sync and share vendors has been impressive. Dropbox reached 200 million users in Nov. 2013. In May 2014 (just six months later) they reported 300 million users! As of this writing, Box, that is more geared for business than Dropbox, claims 25 million users and 225,000 companies as customers. However, in terms of revenue, the data is not as impressive. Box reported $124 million in revenue for the year ending in Jan. 2014, with a loss of $168 million in that period. Dropbox 2013 revenue appears to be just over $200 million. But the investors and VCs are sold on the value of these tools. In Feb. 2014, Dropbox closed a series C round of $350 million at a $10 billion valuation! In Nov. 2013, Box announced a $100 million financing at a valuation of $2 billion. Box has been preparing for an IPO though it was delayed and now it appears that they may go for another round of funding.
Besides Dropbox and Box, there are many other interesting vendors in this space. Players have entered the segment from different backgrounds — pure play start-ups, cloud file storage and backup, content management, large file transfer, social and collaboration, mobility and even device manufacturers. This space has also got the attention of large IT vendors like Microsoft, Google, EMC and IBM as they all have launched their own offerings (e.g. Google, IBM, Microsoft) or have acquired others (e.g. EMC and Citrix). Amazon just announced Zocalo as part of its AWS offerings. Amazon describes Zocalo as “a fully managed, secure enterprise storage and sharing service” which clearly positions it against file sync and share providers for business such as Box. Given Amazon’s significant AWS business and large footprint in cloud services, it seems natural for Amazon to get into this market.
Gartner just published (July 2014) a new Magic Quadrant for Enterprise File Synchronization and Sharing (EFSS). In this rating, Gartner has listed Box, Citrix (ShareFile acquired in 2011), EMC (Syncplicity acquired in 2012 that integrates with Documentum ECM), and Accellion as Leaders. The Challengers (upper-left quadrant) are Dropbox, Google, IBM and Microsoft (OneDrive formerly SkyDrive). IBM entered the space with Connections, IBM social and collaboration offering along with FileNet ECM for its back-end content management. The Visionaries (lower-right quadrant) are WatchDox and Alfresco (an open-source ECM vendor with added sync and share). Hightail, Huddle, Intralinks, Egnyte, and AirWatch (a mobile device management vendor) are the notable vendors among Niche Players. Gartner in Feb. 2013 published a MarketScope for this category, in which it listed Accellion, Box and Citrix as Strong Positive, the highest rating in MarketScope. The fact that Gartner upgraded the segment coverage from a MarketScope to a Magic Quadrant, is a sign of growth and maturity in the segment.
In July 2013, Forrester published a Wave report for File Sync and Share Platforms in which they rated 16 vendors. In this report, Box, EMC and IBM are rated as Leaders. In the Strong Performer category, Forrester includes many vendors: Accellion, Alfresco, AirWatch, Citrix, Dropbox, Egnyte, Google, Microsoft, and Salesforce.com (Chatterbox, a component of its Chatter social platform).
There are other file sync and share vendors that not not rated or mentioned in these reports for various reasons. SugarSync has had some success in OEM deals with device manufacturers and telecom service providers. Soonr claims 150,000 business customers. OpenText, one of the largest ECM vendors, launched Tempo Box a few years ago. HP Autonomy announced HP Flow CM as part of its Autonomy business unit. Apple iCloud is Apple’s solution though it is primarily geared to individual use. In terms of collaboration, Huddle and Intralinks are strong vendors that also provide some file sync and share functionality. Gartner has them as Niche Players in its Magic Quadrant.
Pricing and Business Model
The typical model is to offer different packages for different user types; e.g., personal, professional, business and possibly enterprise. There may be a limit on the amount of storage, storage, or number of users in each tier. There is usually a freemium base option. For example, Dropbox Basic is free with up to 2 GB of storage. Box offers 10 GB storage with 250 MB file size for free. But many of the features of Box are not available with this free option. Dropbox Pro with up to 100 GB of storage is $10 per month. Box Business is $15 per person per month with unlimited storage and 5 GB file size. Dropbox Business is also $15 per person per month with unlimited storage. Price sensitivity may be an issue for specially smaller vendors. Large vendors may be able to influence the market by significant price cuts. For example Google just announced Google Drive for Work with unlimited storage for only $10 per user per month.
File sync and share is a relatively young and already over-crowded space enabled by two important computing trends — cloud and mobility. It provides useful and intuitive functionality to consumers as well as businesses: any-where, any-time, any-device access to one’s files that can also extend to collaboration. For serious business and enterprise use however there are strict requirements for security, compliance and scalability. Interoperability, open APIs and seamless integration with existing content repositories may also be among such requirements that some vendors meet.
Because of the impressive adoption and growth, many vendors big and small have entered this space. Start-ups like Dropbox and Box have already established strong brands with sizable customer bases and have attained phenomenal valuations. However, the presence of large IT and internet vendors like Microsoft, Google, Amazon, IBM and EMC, their large footprints and broad offerings, and the increasingly lower price points may put pressure on smaller vendors in maintaining their growth and achieving their revenue goals.
So as the market evolves and matures, we will see some vendor consolidation in this space. Furthermore, general file sync and share capabilities may become commoditized and be reduced to basic functionality that any cloud and IT service provider will offer. So vendors may need to develop more advanced and specialized capabilities in order to differentiate themselves from the rest. In the mean time the opportunity is real: better and more flexible content sharing and collaboration for businesses, and significant revenue and market share for the successful vendors in this space.