14 DAY TRIAL // Dropbox, Box and other popular services in the industry are caught in between Google and Amazon as the two giants battle it out in the cloud storage department, lowering prices as they try to outdo each other.
“These guys will drive prices to zero. You do not want to wait for Google or Amazon to keep cutting prices on you. ‘Free’ is not a business model,” said Aaron Levie, co-founder and chief executive of Box.
The New York Times reports that companies such as Box, Dropbox and Hightail are doing their best to keep their heads above the water as Amazon and Google engage in a price war. While the two giants can easily afford extra low prices because they have plenty of other sources of revenue, companies such as the three mentioned above are far from having deep enough pockets to make such a thing possible.
Box, for instance, is trying to cater to special data storage needs by handling digital versions of X-rays for companies in the healthcare industry, while Hightail is doing a similar thing for law firms. Dropbox, for its part, wants to make sure users find handling its service easier than any of the competitors.
All these companies already have hundreds of millions of users, some who choose the free tiers, and many who choose to pay to have their content stored in the cloud, making it easily accessible in any corner of the globe. The fact that they’ve had to change their business model indicates that they’re all fighting to survive.
Box reported that it had nearly 40,000 business partners paying between $15 (€11.4) and $35 (€26.5) per month for each user, while Hightail said there were about half a million business customers paying fees starting at $25 (€19) per month. Dropbox has about 300 million customers in the world, most of which choose the free two-gigabytes storage capacity.
At the moment, they’re all doing fine, but Google and Amazon have been fighting it out, lowering prices at an alarming rate, trying to attract new customers for their respective services. One example is the heavy cut made by Google back in March, when the company celebrated the merger between its several cloud computing services by slashing prices to 2.6 cents a gigabyte per month, a fraction of what Dropbox prices its premium services.
As they try to continue being big names in the industry, these smaller companies could feel compelled to lower their prices too, something that will almost certainly not be sustainable.