Saturday, September 20, 2014

Blue Ocean Strategy – Dropbox disruptive Cloud based file hosting Service

Dropbox is a file hosting service that lets users store photos, docs, and videos from anywhere, from any device like desktop, mobile, etc. and share them easily. Other services apart from cloud storage that the company offers is file synchronization, personal cloud, and client software. Dropbox uses a freemium business model, where users are offered a free account with a set storage size of 2 GB initially and paid subscriptions for accounts with more capacity. Dropbox was founded in 2007 by Drew Houston and Arash Ferdowsi and funded by Sequoia Capital, Accel Partners, and Amidzad. Prior to advent of Dropbox, there were many different ways of storing, moving, carrying and sharing files and data like the hard disk, USB drives, Compact Disks, tapes and even there were websites that compressed and reduced file sizes. Specific websites existed for storing and sharing photos, documents, videos and other content types. Dropbox with its technology and business model has eliminated the need for the users to rely on different websites and technologies for storing and sharing data and content. Dropbox has become critical application for many smartphone, computer and tablet users that allows efficient and effective sharing and storage of data and also proved the fact that users are willing to pay price for this type of offering. Dropbox has more than 300 million users and there is huge speculation in terms of company valuation ranging between US$ 5 – 10 billion.

Dropbox is a blue ocean strategy example where in it created a new market for the cloud based personal storage space for the users and later the company moved beyond personal users and started offering enterprise business offerings. A unique value proposition that is initially based on freemium model with limited storage space and users can increase the storage space by simply purchasing online. Dropbox eliminated the need to have a backup drive, it is maintenance free as it is cloud computing based offering and above all very easy to share and store the content. The reliability of the service in terms of privacy of content, storage security and data safety are some of the other major advantages. The rise in the sales of smartphones and tablets also contributed to the growth of Dropbox as these devices come with low storage capacity and users generally have huge content in terms of music, movies, photos, videos and documents. As the ease of creating content increases, users tend to create more content and they need to have access to storage that is not only safe and secure but also be easily accessible from multiple devices and easily share with others. This justifies the company valuation between US$ 5 – 10 billion.

Dropbox has a large user base with good brand reputation and recall but the company is also facing tough competition from competitors like Box and Google Drive that also offer similar offerings and competitors like Google who offer even more product offerings are very tough to beat. Dropbox needs to further enhance their offerings and need to innovate new features and capabilities to survive in the highly competitive market. With its disruptive offering, Dropbox has created a new market which is now highly competitive Red Ocean and it needs to find a new blue ocean strategy to survive for long time. 

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